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Spot price, link to dealer prices and spot price apps.


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Posted (edited)

I used to work and did many projects for data providers and built trading and market data systems for many institutions.... If you google prices for any commodity or financial product that data, dependent on that commodity or products comes from either an exchange via a data provider or direct from a data provider that takes multiple feeds in from various organisations.... i.e. FX Spot price ... there is no one source and all banks, brokers and market participants will update their prices which the data providers consolidate and then re-sell as "real time feeds" or delayed feeds.

For commodities that trade on an exchange the pricing from there goes to the various data providers who re-sell on in the same manner.... Any price you see whether on a bullion dealer site or google site is delayed u less they pay for real time info which is not cheap...

When I stated that the price reflects the trades in effect it does.... as the price movement is based on the volume and direction of the trades i.e. If you have someone hitting the bid on silver at 19.00 for 100ozs then the next bid maybe 18.95 and so on...

Edited by Rll1288
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Posted (edited)

I often have an over simplistic way of thinking but i'm not bothered by the differences in spot prices. I picked a free provider many years ago to follow and used that as a rough guesstimate on the value of my stack / collection. When that source shut i picked another and so on. At present i use the KITCO app yes there is a few pennies difference here and there but i'm only doing it for a basic value. This gives me a like for like track of stack price. Buying price and selling price are always going to be different to spot price.

Edited by StackemHigh
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Posted (edited)

its clear how feeds work in general, and the mark-ups that dealers have.

However, gold trading is not centralised on any exchange: on LBMA there are trades for unallocated gold in London (for immediate "delivery" in London), and the CME/Globex price reflects bids/offers for the future (for delivery of 100oz bars in the US). Between the two, as seen last March there were significant differences.  

There are other exchanges, such as the Shanghai Gold Exchange and that in Dubai etc. This is not to mention the significant number of off-exchange private trades. On top of the different exchanges, locations, there are different deliverables (400oz, 100oz, 1oz eagles, 30g Pandas, sovereigns etc). To get a single, universally acceptable gold price, all these factors need to be controlled for, ideally volume weighted to reflect the size of each market. Gold itself might be fungible, but in practice in the way it is traded, it is not, unlike FX, shares or bonds etc.

Some sources may take a single source, whilst others may use a blend. Under normal circumstances (such as now), where the differences are negligible, the methodology does not matter, and we are none the wiser.

When there are disruptions, large discrepancies occur between sources (~$50/oz) and this becomes apparent in the various sources. I believe it is specifically this that the OP was wondering, and its a good question, as there is very little transparency on precisely what aggregation methodology the feeds are using.  To overly simplify, I would guess that dealers in the US use a feed that relies mostly on CME/Globex, and in the UK it will be the LBMA sourced price.

 

Edited by Spark268
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5 minutes ago, Spark268 said:

its clear how feeds work in general, and the mark-ups that dealers have.

However, gold trading is not centralised on any exchange: on LBMA there are trades for unallocated gold in London (for immediate "delivery" in London), and the CME/Globex price reflects bids/offers for the future (for delivery of 100oz bars in the US). Between the two, as seen last March there were significant differences.  

There are other exchanges, such as the Shanghai Gold Exchange and that in Dubai etc. This is not to mention the significant number of off-exchange private trades. On top of the different exchanges, locations, there are different deliverables (400oz, 100oz, 1oz eagles, 30g Pandas, sovereigns etc). To get a single, universally acceptable gold price, all these factors need to be controlled for, ideally volume weighted to reflect the size of each market. Gold itself might be fungible, but in practice in the way it is traded, it is not, unlike FX, shares or bonds etc.

Some sources may take a single source, whilst others may use a blend. Under normal circumstances (such as now), where the differences are negligible, the methodology does not matter, and we are none the wiser.

When there are disruptions, large discrepancies occur between sources (~$50/oz) and this becomes apparent in the various sources. I believe it is specifically this that the OP was wondering, and its a good question, as there is very little transparency on precisely what aggregation methodology the feeds are using.  To overly simplify, I would guess that dealers in the US use a feed that relies mostly on CME/Globex, and in the UK it will be the LBMA sourced price.

 

It depends.... Usually all exchanges publish data and people like Reuters and Bloomberg's will collect and collate and re-publish. Without seeing the true underlying trades that have occurred you never really know if the movement is strong or not.. i.e. we have seen silver tic above £19.00 again today.. was that heavy trading many thousands of ounces or light trading etc. On Exchange based trading you have many organisations with models that search for arbitrage between pricing differentials in differing exchanges/markets and play both sides... we also have the added dimension on PMs (like most commodities) that you have paper based and physical based sides with contracts maturing on the paper side within a set timeframe (month etc.)... professional traders would not just have a single source and will look at each markets and exchange but for us laymen 🙂, a rough spot price is fine as we don't base our purchasing or selling on it.. really.. we are more long term speculators.. or thats what I tell myself when it goes against me 

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Posted (edited)

silver like everything else trades in a range of prices at any one moment in time.

trading volume can change trading price. at any given moment, the price for 1 toz

can be different to that for 20 toz. the spot price is a single price used to try and

represent all of these trading ranges. it's like the mid price of a share. the spot price

is best used as a gauge of the price range that silver is trading for. the quoted price

for the item is much more important/useful than the spot price.

 

HH

Edited by HawkHybrid

trade in currency, save in gold

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Posted (edited)
17 hours ago, Rll1288 said:

Again you are missing the point.... the feeds that are used are the prices that reflect trades on all exchanges... when they are open.. NYMEX and LME as some stage with be open together and yo can see differing prices between them as orders they receive maybe be different..... i.e. LME Bid 18.50 Offer 19.00, NYMEX bid 18.40 Offer 18.90 ..... therefore you would show a price something like 18.70 ... This would be indicative of where the price is approximately at the moment against the relative orders in the market, on the relevant exchange.... if you paid yo could see the volumes on each exchange on the bids and offers they are showing (in my example LME 18.50/19.00 which may be 1000oz on the bid and 2000oz on the offer. If the middle is 18.70 then you would use that (or the dealers would if that's what they get in they feeds) to base their pricing on. As said before I am sure that dealers would also take into account what premium they would want to add to sell their goods at. If you are asking why does someone like APMEX add points to the spot price and its higher then you would need to ask them. Also, volume has an impact on pricing. 

If you went to your local Bank and said I wanted to exchange USD200 for GBP the rate you would get would not be the same as that for if you wanted to sell USD2mio against GBP.. The same would be on PM's on the exchanges (any exchange) there would be a minimum contract/order size... so wider spreads would be given for smaller amounts.. I can't speak for APMEX but would probably be sure that if you were to ask to buy 100oz of silver they would give you a better price then 1oz.

Look at it this way... do all car dealers give the same price for a car? so what is the actual cost they paid for it? the manufacturer sells it to them at a certain cost and dependent on the dealer and their margins will give you a price based in that. No one knows what the dealer paid for it, we assume that the price for that model is around a certain level based on looking at a number of dealers offers (if you get my drift). Therefore the moral here is that the spot price seen on any site including TSF is a guide price... usually dealers would say we pay a % below spot for your PM's and a margin on top for selling them to you based on the relative value of spot at that time. You strike a deal based on your own set pricing criteria i.e. its value to me for what I need to do. As a stacker with intentions to buy regularly over years spot price is almost ( and I mean almost) irrelevant as if you bought silver a few years ago at X and spot is either much higher or much lower... all you can do is value it against today and what your needs are today ... I have friends who tell me they are millionaires because their house is valued as such. Until you sell that asset you are nothing. 🙂

You're just making stuff and going off on tangents that aren't relevant to anything here.

You don't know what any dealer's feed is based on. That's an empirical question, and a specific one. You'd have to go find out, investigate. I don't know why you keep repeating these generalities. They're not useful. If you want to know what any feed is based on, you can't just guess – you'd have to go find out.

The impact of volume is irrelevant to the question of what a spot price feed is coming from. The fact that businesses add margins is also irrelevant. Cars are irrelevant. The only issue here is where a feed is coming from and what it's based on. In most cases, with dealer tickers, no one knows.

 

 

Edited by Bimetallic
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Posted (edited)
17 hours ago, Rll1288 said:

Again you are missing the point.... the feeds that are used are the prices that reflect trades on all exchanges... when they are open.. NYMEX and LME as some stage with be open together and yo can see differing prices between them as orders they receive maybe be different..... i.e. LME Bid 18.50 Offer 19.00, NYMEX bid 18.40 Offer 18.90 ..... therefore you would show a price something like 18.70 ... This would be indicative of where the price is approximately at the moment against the relative orders in the market, on the relevant exchange.... if you paid yo could see the volumes on each exchange on the bids and offers they are showing (in my example LME 18.50/19.00 which may be 1000oz on the bid and 2000oz on the offer. If the middle is 18.70 then you would use that (or the dealers would if that's what they get in they feeds) to base their pricing on. As said before I am sure that dealers would also take into account what premium they would want to add to sell their goods at. If you are asking why does someone like APMEX add points to the spot price and its higher then you would need to ask them. Also, volume has an impact on pricing. 

If you went to your local Bank and said I wanted to exchange USD200 for GBP the rate you would get would not be the same as that for if you wanted to sell USD2mio against GBP.. The same would be on PM's on the exchanges (any exchange) there would be a minimum contract/order size... so wider spreads would be given for smaller amounts.. I can't speak for APMEX but would probably be sure that if you were to ask to buy 100oz of silver they would give you a better price then 1oz.

Look at it this way... do all car dealers give the same price for a car? so what is the actual cost they paid for it? the manufacturer sells it to them at a certain cost and dependent on the dealer and their margins will give you a price based in that. No one knows what the dealer paid for it, we assume that the price for that model is around a certain level based on looking at a number of dealers offers (if you get my drift). Therefore the moral here is that the spot price seen on any site including TSF is a guide price... usually dealers would say we pay a % below spot for your PM's and a margin on top for selling them to you based on the relative value of spot at that time. You strike a deal based on your own set pricing criteria i.e. its value to me for what I need to do. As a stacker with intentions to buy regularly over years spot price is almost ( and I mean almost) irrelevant as if you bought silver a few years ago at X and spot is either much higher or much lower... all you can do is value it against today and what your needs are today ... I have friends who tell me they are millionaires because their house is valued as such. Until you sell that asset you are nothing. 🙂

 

Edited by Bimetallic
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Posted (edited)
11 hours ago, HawkHybrid said:

silver like everything else trades in a range of prices at any one moment in time.

trading volume can change trading price. at any given moment, the price for 1 toz

can be different to that for 20 toz. the spot price is a single price used to try and

represent all of these trading ranges. it's like the mid price of a share. the spot price

is best used as a gauge of the price range that silver is trading for. the quoted price

for the item is much more important/useful than the spot price.

 

HH

Spot price is based on trades using predefined contracts on the exchanges, not 1 oz or 20 oz retail pieces. COMEX is based on 5,000 oz contract unit. (It's five 1,000 oz bars of 999 silver according to their settlement rules.) It's a uniform unit of silver – it doesn't vary, only the number of units varies.

It's the same on the gold exchanges. I think they go with the 400 oz LBMA bar specifications, or I vaguely recall some of the Asian exchanges using 1 kilo bars as the unit.

Retail products are not the relevant units for commodities exchanges.

Edited by Bimetallic
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Posted (edited)
32 minutes ago, Bimetallic said:

Spot price is based on trades using predefined contracts on the exchanges, not 1 oz or 20 oz retail pieces. COMEX is based on 5,000 oz contract unit. (It's five 1,000 oz bars of 999 silver according to their settlement rules.) It's a uniform unit of silver – it doesn't vary, only the number of units varies.

It's the same on the gold exchanges. I think they go with the 400 oz LBMA bar specifications, or I vaguely recall some of the Asian exchanges using 1 kilo bars as the unit.

Retail products are not the relevant units for commodities exchanges.

 

the shanghai gold exchange trade in 1 Kg units? (it's not uniform across exchanges?)

what I was saying is that the spot price represents a range of prices.

similar to how the mid price for shares represents a range of prices being traded.

(I was using the 1 toz/20 toz to illustrate how realistic trading on a range of prices would

work in practice.)

 

HH

Edited by HawkHybrid

trade in currency, save in gold

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6 hours ago, Bimetallic said:

You're just making stuff and going off on tangents that aren't relevant to anything here.

You don't know what any dealer's feed is based on. That's an empirical question, and a specific one. You'd have to go find out, investigate. I don't know why you keep repeating these generalities. They're not useful. If you want to know what any feed is based on, you can't just guess – you'd have to go find out.

The impact of volume is irrelevant to the question of what a spot price feed is coming from. The fact that businesses add margins is also irrelevant. Cars are irrelevant. The only issue here is where a feed is coming from and what it's based on. In most cases, with dealer tickers, no one knows.

 

 

😀😀🤘 Wow and I mean wow.... I am not just "out" of this conversation... I am "out out" 🙂 good luck with your investigation and may the gods of wisdom and logic be on your side and you find the answer that you are looking for.... 

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