In this segment, we will discuss, what is the spot price, (spot) Several factors, including supply, demand, and futures prices determine the spot price. There are two different prices to be concerned with. The “Bid” price is the price you will be paid if you sell a commodity like gold or silver bullion. The “Ask” price is what you will pay when making a purchase. The difference between bid & ask is referred to as the spread.
Several market indexes, physical supply and demand, and other geopolitical reasons determine the spread. In a quiet market, you can expect the spread between the bid and ask to be tight, and when you have a highly volatile market, there could be a much wider margin between the bid and the asking price. An educated gold bullion investor might ask a dealer what the spread is to gauge market activity.
The spot price differs from what you pay when buying a physical commodity like gold bullion. The additional overhead above the spot is the retail price. This price includes, among other things, broker commission, transportation, and production. Remember, there are different retail degrees, such as high and low retail. On the other hand, when you buy gold in the form of paper, or a contract to buy gold or stock, you can expect to buy near the market’s spot for the commodities you purchased.
Many precious metals investors keep an eye on the spot price daily. Companies like PrivateBullion.com have price alert tools that notify you by text message or email when the spot has hit a certain milestone or goal that you have. Many different strategies involve the spot price, and we recommend you discover a plan that secures your future and keeps your assets safe.