What is a Gold Exchange?


What is a Gold Exchange?  I’ve had this question asked a couple times now so I thought I write a quick response because I’m sure others are wondering as well.

There are a couple of definitions for a gold exchange.  The first, less obvious one is a gold exchange-traded fund.  These are also known as ETFs (Exchange Traded Funds) or CEFs (Closed End Funds) that will track the price of gold.  Basically, these are methods that a person can use to invest in gold without having to actually make a physical gold transaction.  These types of funds are very common these days.  Funds like these that track indices such as the Dow Jones Industrial Average, or the S&P 500 are called “index funds”.  They are derivative form of investing that are intended – at least partly – to make it easier for a person to invest in a product.   In other words, instead of going out and having to do all the legwork it takes to shop for and purchase some gold or silver (or one share of every stock in the S&P 500 for yourself), and then having to store it safely somewhere, you can just buy some shares in a gold ETF.  Personally, I think that having and holding the gold is a lot of the fun, but that’s just me.  We’ll talk more about ETFs and other forms of paper gold investment in our article Buy Physical Gold.

gold exchangeThe other definition for Gold Exchange is your typical “gold for cash” or “cash for gold” establishment We had a pretty good discussion about these types in our Gold for Cash article; you might want to check that out.  You’ll also see these places listed as a “silver and gold exchange” or a “gold and diamond exchange.”  They are named such because they will “exchange” your valuable precious metals for half of their real value.  Pretty good deal, eh?  (For them, that is.)  Make sure you check out the article.

So, that’s pretty simple, no?  Before I go, I’d like to reminisce a bit about my younger days.  I was free and young and living in Europe in the mid-80s.  I was in the Air Force (so I guess that I wasn’t that free) and I was serving on temporary duty in Saudi Arabia as a crew member on AWACS flights that were overseeing a tense Persian Gulf situation (sure glad things aren’t so tense anymore – ha.) I spent about eight weeks over there and I have many vivid memories remaining:  the women and children at the backs of the buses; the heat and the dust; the prayer calls six times a day; all the construction cranes; and walking the gold souks in downtown Riyadh.  There was so much gold for sale at that “gold exchange.“  I remember stalls and stalls of the shiny in all shapes and sizes.  I bring this up as a reminder that gold is real money.  We in America have long forgotten about “real money,” but we are slowly waking up.  If you’re still lying in your metaphorical bed continuing to hit the snooze button, consider this your wake up call.  Get yourself some protection.  Get some gold soon.  You don’t have to hop a long flight to Riyadh to do it.

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