Guide to gold

Gold Glossary

Allocated gold

Allocated gold or silver is physical bullion stored in a professional vault which belongs to the owner outright. Allocated metal does not feature on the vault provider's balance sheet. It isn't exposed to their financial performance, because it is not an asset of that company. Allocated gold or silver bullion is the owner's personal property, held under a custody (or 'safekeeping') arrangement. This is different to unallocated gold and silver. Using BullionVault, investors only trade allocated gold and silver.


Using BullionVault your bullion is held as a bailment.

Bailment refers to a legal relationship where physical possession of personal property, is transferred from one person (the 'bailor') to another person (the 'bailee') who subsequently has possession of the property. It occurs when a person gives property to someone else for safekeeping.  Bailment is different from a contract of sale, as it only involves the transfer of possession and not its ownership.

Ben Bernanke

Career academic and central banker Ben Bernanke is current chairman of the Federal Reserve, the central bank of the United States. His second term will end in January 2014. Under Bernanke's leadership the Federal Reserve has taken US interest rates to all-time lows near zero. The Fed has also embraced 'quantitative easing' – the creation of money to buy US Treasury bonds and mortgage-backed securities. QE was first advocated by Ben Bernanke as a solution to Japan's long economic depression when he was a Fed governor in 2002. The practice is generally referred to as 'printing money', an idea Bernanke himself used to describe it in that speech. The Fed's quantitative easing is widely credited with boosting the gold price by devaluing the US Dollar, the world's dominant currency.


A bear is an analyst, trader or investor who thinks the price of a financial asset will fall. The term 'bearish' refers to this attitude of expecting a drop in market value. It also means a downward price trend or 'downtrend'. A falling price over time is a 'bear market'.


An investor, trader or analyst who expects prices to rise. The term bullish also means a market 'uptrend', with rising prices setting higher lows and higher highs over time. Hence the phrase 'bull market', the opposite of bear.

Central Bank Gold Agreement – CBGA

Central banks in Western Europe hold large stocks of gold bullion, accounting on average for 35% of their total foreign currency reserves. These gold reserves are a legacy of the 19th century Gold Standard, when national currencies were fixed against a certain quantity of gold, and could be exchanged for it. By the late 20th century, however, these gold reserves were deemed too large.

Central banks in Europe began to sell as the price fell through the 1980s and '90s, with the Swiss deciding in a referendum to sell 1,300 tonnes in 1999. The UK then shocked the market by announcing it would sell half its national gold reserves that same year. Fearing a sharp drop in prices, European central banks quickly agreed to give advance notice of their sales, capping their joint disposals to 400 tonnes per year until 2004. They also agreed not to lend any more gold to the market, where mining companies were borrowing and selling it to hedge their future production.

That first Central Bank Gold Agreement was signed by 15 official-sector institutions, including the European Central Bank, all of its then members, and also the Swiss National Bank and the Bank of England. It was renewed with a new, higher annual limit of 500 tonnes in 2004. The third CBGA was signed in September 2009, but again with an annual cap of 400 tonnes after sales had almost ended amid the global financial crisis.

CBGA-3 is set to expire in September 2014. By the autumn of 2013, only 20 tonnes had been sold out of a possible limit of 1,600 tonnes.

Chain of integrity

The chain of integrity ensures the quality of the large bullion bars traded by wholesale dealers. Because each buyer knows the identity of their seller, there is a history of ownership. So if a gold or silver bar ever turns out to be bad, the current owner can challenge their seller, who challenges their seller in turn, back to the metals refiner or dealer who first put it into the circuit. There is no question of tampering in between, because Good Delivery bars must be kept inside specialist third-party vaults to retain their status. The bullion bar's quality (or 'fineness') is thus warranted, reducing transaction costs dramatically for wholesale traders.

Every silver or gold bar held for customers of BullionVault has a chain of integrity. Each bar was made by an accredited refiner on the London Bullion Market Association's Good Delivery list, and stamped with a unique serial number, the manufacturer's name or logo, the bar's weight, and its purity (at least 99.5% gold or 99.9% silver). It has then been kept continuously in approved vaults, and has only ever been shipped by approved carriers. Through the chain of integrity, any problem can then be traced back to the refiner who created it, and any financial loss can be made good. Customers are never at risk.

Commercial traders

A technical term from the US futures market. The 'commercials' in gold or silver act for companies who produce metal for sale, such as miners, refining companies or bullion banks. These companies are always exposed to falling gold or silver prices. So they use futures contracts to 'hedge' their exposure, by taking a short position which will profit if the price of gold or silver does drop.


A mix of unrefined gold and silver, produced at the mine to make shipment cheaper.

European Central Bank - ECB

Established in January 1998, the ECB is responsible for the single Euro currency used in the 17 member states of the European monetary union. Setting the quantity of bank notes in circulation (but not Euro coins, which are minted at will by member-state central banks), the ECB was established by political treaty, and its primary mandate is to maintain price stability (ie, avoiding inflation) for the 330 million citizens of the Eurozone. Historically, high levels of inflation with low economic growth have a positive impact on demand for gold and the gold price. Former governor of the Banca d'Italia in Rome, Mario Draghi is the current president of the ECB.

Exchange Traded Funds - ETFs

ETFs are a financial instrument traded on the stock market and designed to track the market price of another asset, such as a group of businesses, bonds, or a specific commodity. Created as a trust, an ETF will typically hold enough of the underlying asset to back its market value. Investors then own shares in that trust, but do not own the underlying asset directly.

The largest gold ETF is the SPDR Gold Trust (ticker: GLD). At the gold-price peak of 2011, it was the largest ETF in the world, overtaking the S&P ETF (ticker: SPY), which tracks the value of the US stock market. To cover storage and other fees, the SPDR charges an annual management fee of 0.40%. It is deducted daily from the amount of gold backing each share, meaning that the net asset value of the shares shrinks over time, down from one-tenth of an ounce at launch in 2004 to some 96.5% in late 2013.

Unlike a gold ETF, BullionVault charges its users, who own their property outright, storage fees in cash. The monthly fee for gold, with insurance included, is 0.01%. There is a monthly minimum of $4 or equivalent. Read more about Gold ETFs.

Federal Reserve – the Fed

Founded in 1913 to provide the United States with "an elastic currency" after what was known as the Bankers' Panic of 1907. Consisting of 12 member banks with 25 branches across the nation, the Fed is technically a private organization. But it fulfils the standard central bank roles. The Fed decides the country's monetary policy (interest rates and, since 2008, quantitative easing), manages its reserve assets (including gold bullion on behalf of the Treasury), clears checks and other bank-account transfers, and acts as lender of last resort to troubled lenders and investment institutions. The success or otherwise of the Federal Reserve's policies impact the strength of the Dollar and consequently impact the demand for gold and silver, and their price.


Where the purity of gold jewellery is measured in carat, investment gold is measured in fineness. Near-pure 24-carat gold is equal to 995 parts per thousand, known as "995 fine" (also "0.995" and "two-nines-five"). That is the minimum fineness specified by the London wholesale market's Good Delivery standard. Bullion coins for retail investors are typically 999 fine (also "0.999" or "three-nines"), as are kilobars for the Chinese investment market. Professional wholesale dealers only ever charge for fine gold content. So large 400-ounce gold bars are priced on gross weight X fineness. Things are different for silver, where the wholesale standard is 999 fine and dealing prices do include that 1 part per thousand of impurity.

Gold Bullion Investment Trust [GBIT]

A connected organisation of the World Gold Council. In 2016, the World Gold Council transferred its 11% holdings in BullionVault to GBIT.

Gold Futures

A gold future is a contract to trade a specific amount of gold at a set price decided now, but with a future settlement date. That means you don't have to pay yet (at least not in full) and the seller doesn't need to deliver you any gold either. Futures contracts are traded on formally-recognized exchanges, such as the US Comex in New York or Shangai Gold Exchange. Learn more about Gold Futures.

Good Delivery

Good Delivery bars are cast by a small group of precious metal refiners, approved by the professional bullion dealing community. These bars then stay inside accredited storage, moving only from recognized vault to recognized vault, until they are finally withdrawn by the end-user. At that point, the chain of integrity is broken, and Good Delivery status is lost.

The phrase Good Delivery typically refers to London Good Delivery (see LBMA), the premier standard internationally. But there are other "lists" of approved refiners for some other markets, such as the Comex futures exchange in the US. Good Delivery bars are accurately assayed and must meet strict rules on fineness, weight, shape and marking. Because the chain of integrity ensures the quality of London Good Delivery bars, they are warranted to be 99.5% pure gold or better, or 99.9% silver. The market only trades pure gold content (gross bar weight x purity) which is known as fine gold. No-one who trades professional market gold ever pays for impurities. Because silver fineness is greater, and the value is lower by weight, silver is traded gross.

Good Delivery bars are large – around 400 troy ounces each (12.4kg) for gold, and around 1,000 ounces for silver (31.1kg). BullionVault only vaults London Good Delivery bars for its users, who can own down to 1 gram of metal (fine gold or gross silver) inside those wholesale units.

Gold Investor Index

The Gold Investor Index is a monthly indicator of private sentiment towards physical gold bullion. It is calculated using proprietary data from BullionVault, the world's largest provider of investment bullion ownership online. The Gold Investor Index shows the balance of BullionVault users adding to their holdings vs. those who reduced them over the last month, as a proportion of all gold-owning users at the start. A reading above 50 indicates more buyers than sellers. To learn more, please see the latest Gold Investor Index within Gold News.


Financial hedging is where a company or an investor looks to reduce or eliminate their exposure to an asset they already own. This can be done by taking an equal and opposite position using futures contracts. An owner of silver for instance, fearing a price drop ahead, could sell futures contracts which will rise in value if silver falls. That profit offsets the loss, creating the 'hedge'.

The main use of hedging is by commercial businesses involved in the production of a raw material or product. In the gold mining industry, so-called 'producer hedging' became increasingly popular during the long price drop of the 1980s and '90s. Fearing further price drops ahead, which would result in lower revenues for gold miners, the industry as a whole borrowed and sold 3,100 tonnes of gold by 2001 – then equal to 15 months of the world's entire gold-miner production. That locked in current prices, with the gold loan ready to be paid back as the miner dug gold from the ground in future. Some miners became over-hedged however, losing money when the gold price then began to rise. The industry started to close its hedging positions, buying back the metal it had sold at rising prices. The gold miners' hedge-book was effectively closed in early 2011, as prices rose to new all-time highs.


Inflation is characterised by widespread and continued price rises that reflect a loss of purchasing power in a currency. What can be bought with 100 Dollars today, for instance, is much less than could be bought 20 years ago. When a currency loses value more rapidly, demand for gold or silver in that currency may rise as individuals look for a more stable store of wealth and value.


The preferred bar size for gold investment in India and China. Requires melting and recasting of the wholesale market's larger 400-ounce Good Delivery bars. Chinese demand also tends towards higher purity than the London standard of 995 parts per thousand, preferring 999 parts.

London Bullion Market Association - LBMA

The London Bullion Market Association (LBMA) represents the wholesale gold and silver market worldwide. Its members provide the banking, dealing, vaulting and transport services which buyers and sellers need to trade large-bar gold and silver efficiently. To ensure the quality of material, the LBMA issues and maintains on behalf of its members the Good Delivery List of bullion refineries, who are approved to produce the large bars accepted by the London market. These wholesale bars must meet strict standards of fineness, weight, shape and markings.

The LBMA's nine market-making members, all of whom are international investment banks, undertake to quote firm buy and sell prices throughout the day for gold and silver delivered inside accredited London vaults. BullionVault is the only ordinary member of the association dedicated solely to providing precious metals to private individuals. The LBMA's small executive team also represent the market's interests to governments and regulators, and arrange various social functions for networking, such as the annual LBMA conference – widely seen as the premier event for gold and silver worldwide. Learn more about the LBMA or visit


An investor or trader who owns an asset or holds a derivative contract which will profit from it rising in price is said to be 'long' or to have 'a long position'. Owning physical gold, or holding gold futures or options which will rise in value with the gold price, makes you 'long (of) gold'.


Large speculators using the US Comex market to trade gold or silver futures must report their positions to the Commodity Futures Trading Commission (CFTC) once a week. So must 'commercial' traders using the futures market to hedge their position. But small speculators don't need to report their trading. Added together, these smaller positions make up what's known as the 'Non-Reportable' category of traders in the weekly Commitment of Traders report.


Pamp is a precious metals refiner established in 1977 and based in Ticino, Switzerland.  Pamp is a member of the LBMA and one of the small group of precious metal refiners that produce 400 troy ounce Good Delivery gold bars. Pamp also mint the Fortuna 100g gold bar which can be withdrawn from BullionVault.

Paper Gold

Paper gold is a recent phrase, becoming common amongst internet bloggers in the last few years. It refers to investment products which are related to gold prices, but without the investor gaining physical ownership of any metal. This means the supply can be increased at will by banking providers, undoing the rarity which investors seek when buying real gold.

Most typically, the phrase 'paper gold' means US gold futures and options contracts, which are effectively a bet on the price moving higher or lower. Futures contracts may be settled for physical gold, but they don't refer to any specific metal, and they are settled for cash in the vast majority of instances. Some bloggers also include exchange-traded gold funds in the phrase 'paper gold', even though the largest and most widely traded gold ETFs are backed with physical gold.


The amount of money put into an asset by an investor. A 'long position' means you are invested for rising prices; a 'short position' means you are set to profit if prices fall. Investors increase or reduce their position when they change the quantity of an asset which they hold.


In the physical gold market, premium means the extra price charged in Asia's large dealing centres, over and above London prices. Notably quoted in Mumbai, Hong Kong and Shanghai, the premium is typically priced in US dollars per ounce, and reflects local conditions. It rises when demand rises faster than importers can arrange new deliveries of large Good Delivery gold bars out of London – heart of the world's physical gold market – through Swiss refineries, and into Asia as kilobars, the preferred investment form locally.


A pronounced upward trend in an asset's price, whether gold, a currency, securities or commodities.


The word 'resistance' is used in technical analysis of price charts. It means a price-point which, on the charts, looks likely to cap or pause any rise. Resistance is usually suggested by previous price-action, enabling an analyst to see where price rises halted in the past. If that level is broken, then chart analysis says resistance can become 'support', acting to stem any price falls from the new higher ground.

Speculative Position

A technical term from the US futures market. Speculative traders in Comex gold or silver futures are those players who aren't part of the precious metals industry, and so aren't looking to hedge an existing position. Instead, these 'non-commercial' traders are looking to profit by predicting the direction of prices, buying futures if they think prices will rise, or selling them if they expect prices to fall.

The so-called "speculative net long position" looks at the net betting by speculators overall. It is calculated by taking the total number of long contracts they hold as a group, and subtracting the number of short contracts held by non-commercial traders (such as hedge funds). These positions are considered an indicator of sentiment in the short term on the derivatives market. Gold Market Speculation: Who, What and Why?

S&P 500

The S&P 500 is an important stock market index in the United States. Established in 1954 by Standard & Poor's, a credit rating agency, the value of the index is based on the market capitalisation of 500 of the largest publicly-traded US companies, chosen to reflect the range of US business activity. Criteria for selection also include a minimum market value of $4 billion, with at least 50% of the shares in public hands, and a market price of at least $1 per share.

Short position

Short selling or 'shorting' refers to the practice of selling an asset you don't own, with the aim of buying it back at a lower price in future. Aiming to profit from falling prices, you may borrow the asset first before selling it, or use derivative contracts to create your short position. The opposite is long.


The word support comes from technical analysis of price charts. It means a price level below which an asset seems reluctant to fall, as suggested by previous action. Support is the opposite to resistance.

Troy ounce

One troy ounce is the standard unit used for weighing and pricing precious metals in the English-speaking West. Coming from Troyes in France, the troy ounce is not the same as an imperial ounce, weighing 1.097 times as much. The troy ounce is used to quote benchmark prices in the London physical and New York futures market. 1 kg = 32.1507466 troy ounces.

Treasury bond

A Treasury bond is a fixed-income investment, sold by the US government to raise spending money. T-bonds (as they're also known) then trade in the investment market, rising and falling in price to reflect interest rates, the outlook for inflation, so-called 'safe haven' demand when stock markets fall, and also concerns over the amount of US debt in issue. Treasury bonds' annual interest payments are fixed in Dollar terms, as is the redemption value of each bond when it matures and the US government pays back the principal loan to whoever now owns it.

Unallocated gold

Unallocated gold is a bookkeeping device by which a bank or other enterprise provides you with notional gold. The gold is a liability to you on their balance sheet. It is synonymous with gold 'accounts' and its holders are unsecured creditors. BullionVault users are only able to trade allocated gold. Read more about Unallocated gold.

World Gold Council

The World Gold Council is the market-development organisation for the gold industry. Its 23 members comprise the world's leading gold mining companies, representing approximately 60% of global corporate gold production.

Working within the investment, jewellery and technology sectors, as well as consulting on government affairs, the World Gold Council's purpose is to provide industry leadership, whilst stimulating and sustaining demand for gold. It made an investment in BullionVault in 2010, acquiring an 11% stake. In 2016, it transferred its holding to Gold Bullion Investment Trust [GBIT] which became the registered owner. GBIT is a connected organisation of the World Gold Council.

World Platinum Investment Council

The World Platinum Investment Council is the organisation established by the six leading platinum producers to develop the market for platinum investment demand.

The World Platinum Investment Council works with financial institutions, market participants, refiners and manufacturers to stimulate investor demand for physical platinum by developing platinum investment products and providing research and critical insights to enable more informed investment decisions regarding platinum.

In March 2017 BullionVault in conjunction with the World Platinum Investment Council added platinum to the online trading marketplace alongside gold and silver.

What Now?

You can learn about the best ways to buy gold and silver by reading our free guide, Ready to Buy Gold. It's online, it's free, and you don't need to register to read it here right now.

BullionVault has also collated what we think are some of the most informative articles on the subject you'll find anywhere.

Popular gold research links:-

BullionVault's own current analysis is an up to date index of gold stories published by BullionVault's own research staff.

BullionVault's analyst forum is an up to date and selected collection of work by of the best brains in the gold sector.

Don't forget, if you want to buy gold then this is the best way today.

Please Note: This analysis is published to inform your thinking, not lead it. Previous price trends are no guarantee of future performance. Before investing in any asset, you should seek financial advice if unsure about its suitability to your personal circumstances.

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