A new video created by one of U.K.’s most reputed gold dealers is motivating investors to go back to basics and revisit a fundamental concept that drives the market - the gold price per ounce. In the video, Daniel Fisher, owner and founder of Physical Gold walks viewers through the basics in order to better equip them in understanding the gold market and making money from it. Daniel says that many investors struggle to understand these basic concepts, which can later prove to be a deterrent to smart investing.

In explaining how the spot price of gold behaves, Daniel points out that it is a fluid number which is continuously changing as the market keeps moving up and down. As long as the worldwide markets are open, the price keeps fluctuating. Markets closed for a few hours each day between the closing time of the New York market and the opening time for Asia. During this period, the gold price does not move. Apart from this, markets also cease to function on weekends and major holidays like the 1st of January. At all other times, the price of gold will be moving continuously.

Another concept covered in the video is that the spot price isn’t the price at which you can buy or sell gold. This is considered to be merely a benchmark price and actual purchases always attract a premium charged by the industry in order to cover the costs of manufacturing and logistics. Of course, investors can avail of a discount to the premium when buying larger quantities. However, Daniel reiterates that premium is chargeable, irrespective of whether it’s a small investor buying only a few gold coins or a large national central bank purchasing tons of gold.

The concept of buying gold electronically in the form of ETFs could be the one instance where investors can buy gold closest to the spot price, as electronic gold does not incur charges related to production and delivery. Likewise, the highest premiums will be attracted by older gold coins on account of their rarity and numismatic value.

The video also explains how the spot price, which is always quoted in US dollars per ounce can be converted into its Sterling price in both ounces, as well as grams.