The Hidden Battle Behind Gold’s Price: London vs New York vs Shanghai

All right, let's get right into it. When

you pull up the price of gold, you just see one number, right? Simple. But

behind that single price is a fascinating hidden world. We're going to pull back the curtain on the mechanics of it all. What you'll see is a global story, a battle between three totally different markets, all pulling on that

price from different directions. So,

here we are, November 2025, and that's the number you're looking at, $4,054 an ounce. But, you know, that number isn't

ounce. But, you know, that number isn't just static. It's the end result of a

just static. It's the end result of a massive aroundthe-clock global tugof-war. And the story of how we

tugof-war. And the story of how we arrive at that specific price, well, it's way more complex and frankly way more interesting than you'd probably think. So, that's the big question,

think. So, that's the big question, isn't it? Where does that number really

isn't it? Where does that number really come from? To get to the bottom of it,

come from? To get to the bottom of it, we have to look past the ticker symbol.

We need to dive into three completely separate and often clashing global markets. Each one has its own rules, its

markets. Each one has its own rules, its own players, and its own agenda. And

honestly, if you can get your head around these three pillars, you're going to understand the gold market better than 99% of people out there. Okay, so

here's how we're going to break it all down. First, we'll introduce the three

down. First, we'll introduce the three pillars of gold. Then, we'll dig into each one. London, the wholesale

each one. London, the wholesale foundation, New York, the paper casino, and Shanghai, the physical reality.

After that, we'll see how the paper price and the physical floor interact, which all leads up to the big picture, the global tugof-war.

All right, first up, let's head to London. We're talking about the London

London. We're talking about the London Bullion Market Association, the LBMA.

The best way to think about this place is like the wholesale foundation for the entire global gold market. This is the bedrock. So, the first thing you have to

bedrock. So, the first thing you have to understand about the London market is that it's not like the New York Stock Exchange. There's no public trading

Exchange. There's no public trading floor. It's what's called an

floor. It's what's called an over-the-counter or OTC market. That's

just a fancy term that means the big boys, we're talking central banks, massive financial institutions, the bullion banks, they all trade directly with each other, kind of behind the scenes. And what are they trading? not

scenes. And what are they trading? not

little coins. They're moving enormous 400 ounce good delivery bars, the standard unit. Now, here's the really

standard unit. Now, here's the really wild part. Most of this gold never

wild part. Most of this gold never actually moves. The whole system runs on

actually moves. The whole system runs on something called local London. It sounds

complicated, but all it means is that the gold is local to London. The bars

sit in a secure vault, and when a trade happens, they don't load it onto a truck. They just change a name on a

truck. They just change a name on a digital ledger. Bank A's gold is now

digital ledger. Bank A's gold is now Bank B's gold. It's a system built for efficiency, for settling massive accounts between global powers. This is

where the world's deep wealth truly resides. And just to give you a sense of

resides. And just to give you a sense of the sheer scale we're talking about, look at that number. A single one of those 400 ounce bars at today's price is

worth over $1.6 million. Yeah, one bar.

So, it becomes pretty obvious, right?

This is not a retail market. This isn't

where you or I go to buy an ounce of gold. This is the deep, deep plumbing of

gold. This is the deep, deep plumbing of the global financial system. It's a

private club for moving massive institutional wealth around the world quietly and efficiently. Okay. Now, this

this next part is absolutely critical to understanding how this all works. You

ready? The vast majority of trading in London, we're talking over 90%, happens through something called unallocated accounts. And this is really where the

accounts. And this is really where the concept of paper gold is born. See, with

an unallocated account, you don't own a specific gold bar with a serial number on it. Instead, you basically have an

on it. Instead, you basically have an IOU from the bank. You're an unsecured creditor. It's like having a claim check

creditor. It's like having a claim check at a coat check, but they haven't written your specific coat's number on it. Now, because of this, the bank can

it. Now, because of this, the bank can use the physical gold that's supposed to be backing all these accounts and lend it out multiple times. It's called

rehypothecation. So, just let that sink in. This system creates a situation

in. This system creates a situation where for every single real physical ounce of gold sitting in a London vault, there might be 10, 50, or even over a 100 paper claims all pointing to that

same ounce. It's a massive inverted

same ounce. It's a massive inverted pyramid of paper built on a tiny sliver of physical metal. So, we've got London, the old world vault, the foundation.

Now, let's hop across the pond to New York City and our second pillar, the ComX. And let me tell you, this is a

ComX. And let me tell you, this is a completely different beast. If London is the quiet, exclusive wholesale club, then the ComX, well, a lot of people call it the paper casino. The ComX is

what's known as a futures exchange. The

whole point of this market isn't really to buy and sell physical gold bars. No,

no. It's all about making bets on what the price of gold will be in the future.

The main players here are a different crowd. You've got hedge funds, super

crowd. You've got hedge funds, super fast algorithmic trading computers, and the big banks all speculating. It's a

high-speed electronic market, which is why when you see the price of gold jump or crash in a matter of seconds, it's almost always happening here first. And

the key to the whole game is leverage.

This is huge. Leverage means a trader can control a massive position, say a 100 contract worth hundreds of thousands of dollars, by putting down just a tiny percentage of the total value as margin.

It's financial dynamite. It magnifies

your potential profits, but it can also blow up in your face and magnify your losses just as fast. This is what drives that frantic second by second price discovery. And this right here, this is

discovery. And this right here, this is why they call it the paper casino. Look

at that stat. Less than 1%. Think about

that. Out of every 100 contracts traded, maybe one maybe actually ends with someone taking delivery of the physical gold. The other 99 plus% are just

gold. The other 99 plus% are just settled in cash. That means at the end of the contract, you just square up your bet. If you are right, you get cash. If

bet. If you are right, you get cash. If

you are wrong, you pay cash. The

physical medal is almost an afterthought. It confirms that this

afterthought. It confirms that this isn't a market for gold. It's a market for betting on the price of gold. Now,

because this market is so leveraged and so paperbased, it can be well a little bit vulnerable to manipulation. And we

don't have to guess about this. Just

look at the case from 2020. JP Morgan

had to cough up nearly a billion dollars in fines. Why? Because their traders

in fines. Why? Because their traders admitted to manipulating the gold and silver markets for years using an illegal tactic called spoofing. It's

pretty clever in a devious way. Imagine

you want to buy gold cheap. You'd place

a gigantic fake sell order on the market. The other traders and algorithms

market. The other traders and algorithms see this massive wall of selling and they panic thinking the price is about to crash. So they start selling for

to crash. So they start selling for real. The price drops. Then just

real. The price drops. Then just

milliseconds before your fake order would actually go through. You cancel it and then you swoop in and buy up all the cheap contracts from the people you just scared. It's a perfect example of how

scared. It's a perfect example of how paper markets can be pushed around by forces that have absolutely nothing to do with real world physical supply and demand. Okay, if there's one slide that

demand. Okay, if there's one slide that puts this all into perspective, it's this one. Just look at those bars. On

this one. Just look at those bars. On

the left, you have the amount of paper gold traded in London and New York every single day. Around 74 million ounces.

single day. Around 74 million ounces.

Now, look at the bar on the right.

That's how much new gold is mined from the entire planet in a whole year. About

10 million ounces. Let me say that again. The paper markets trade more gold

again. The paper markets trade more gold in a day than the entire world mines in a year. The paper tail is wagging the

a year. The paper tail is wagging the physical dog on a scale that is just mindboggling. The disconnect from

mindboggling. The disconnect from physical reality is immense. All right,

so we've seen the paper world of the West. Now, let's go east. We're heading

West. Now, let's go east. We're heading

to Shanghai for our third and final pillar, the Shanghai Gold Exchange or SGE. And you have to understand, this

SGE. And you have to understand, this exchange was set up with a very specific purpose. It was designed from the ground

purpose. It was designed from the ground up to be the complete opposite of the COMX. It was designed to be the

COMX. It was designed to be the anti-comx, a market where physical reality is the only thing that matters.

So, what is the SGE? It's a physical spot market. That means its whole

spot market. That means its whole purpose, its entire reason for being is to facilitate the transfer of actual physical gold. It's not about betting on

physical gold. It's not about betting on the future price. It's about buying the metal today for delivery today. Remember

how on the comx physical delivery is super rare, less than 1%. Well, here in Shanghai, it's the complete opposite.

Physical delivery isn't the exception.

It's the rule. It's the default outcome.

You buy gold on the SGE, you own a specific, fully paid for allocated gold bar. No IUS, no claims, just metal. And

bar. No IUS, no claims, just metal. And

the entire structure of this market is built to enforce that physical reality.

First, all gold is 100% allocated. But

here's the killer rule. If you want to sell gold on the SGE, you have to prove you have the physical bars sitting in an approved fault before you can even place the order. Think about what that does.

the order. Think about what that does.

It makes a practice like naked shorting where you sell massive amounts of gold you don't even have just to crash the price totally impossible. You can't sell what you don't have. And who's trading here? Not hedge funds speculating. It's

here? Not hedge funds speculating. It's

the actual consumers of the metal.

Jewelers who need gold for rings, industrial users for electronics, and a massive base of retail investors who want to own physical 1 kilo bars. It's a

market tied directly to real world supply and demand. And this chart really shows you the SG's power in the physical market. While the West is swapping

market. While the West is swapping trillions of dollars worth of paper IUS, the SG acts like a giant physical vacuum cleaner for the world's gold. Every

single year, somewhere between 50 and 70% of all the new gold that's mined on the entire planet gets sucked into the SGE system, withdrawn from the vaults, and delivered into private or commercial hands in China. The East is not just buying paper claims. It is

systematically accumulating the world's physical supply. Okay, so we've got

physical supply. Okay, so we've got these two totally different systems. the west driven by paper. The east driven by physical. So what happens when they

physical. So what happens when they collide? Because it's this collision,

collide? Because it's this collision, this interaction that creates the price you and I see on the screen every single day. So you really have two competing

day. So you really have two competing forces here. In the west with the LBMA

forces here. In the west with the LBMA and the ComX, you have the engine of price discovery. It's fast, it's liquid,

price discovery. It's fast, it's liquid, it's driven by paper and leverage, and it tells you the price of gold right now. But in the east with the SGE, you

now. But in the east with the SGE, you have the price foundation. This is the hard floor. It's based on how much real

hard floor. It's based on how much real people are willing to pay to get their hands on the actual physical thing. One

sets the price, the other sets the floor beneath which that price can't really fall for long. And you can actually see this dynamic play out in real time through something called the Shanghai premium. It's simple. It's just the

premium. It's simple. It's just the difference between the price of physical gold in Shanghai and the paper price in London or New York. And almost all the time, the price in Shanghai is higher, sometimes by $10, sometimes by $50 an

ounce or more. What is that premium?

It's the price of reality. It's the

extra amount the market is willing to pay to have the real thing right now instead of just a paper promise. It's

tangible proof of this disconnect. So,

if the prices are different, how do they stay connected at all? The answer is something called arbitrage. And it acts as a bridge between these two worlds.

It's what keeps the paper price tethered, however loosely, to physical reality. Here's how it works. When not

reality. Here's how it works. When not

Shanghai premium gets big enough, smart traders see a risk-free profit. Step

one, they buy the cheaper paper gold in London or New York. Step two, they stand for delivery, telling the exchange, "No cash. I want the metal." Step three,

cash. I want the metal." Step three, they put those gold bars on a plane and fly them to China. And step four, they sell the physical bars on the SGE for that higher price and pocket the difference. It's a simple, profitable

difference. It's a simple, profitable trade, and it has a powerful effect. It

physically drains gold out of the west and sends it east, forcing the western price to pay attention to the eastern physical demand. So, let's put it all

physical demand. So, let's put it all together. Now, what does it all mean?

together. Now, what does it all mean?

Well, what you have is a true global tugof-war. You have these three pillars,

tugof-war. You have these three pillars, each with a different purpose, each with different rules, all pulling on the price of one single asset. This chart

really lays it all out perfectly. You

have London, the LBMA, whose primary purpose is to be the global benchmark, the place where deep wealth is stored.

You have New York, the comics, which is all about hedging and speculation, the casino, where the momentto moment price is discovered. And then you have

is discovered. And then you have Shanghai, the SGE, which is about one thing, physical consumption. And look at that row for physical delivery. In New

York, it's rare, less than 1%. In

Shanghai, it's the standard. That says

it all. The key functions are completely different. London is where wealth is

different. London is where wealth is stored. New York is where price is

stored. New York is where price is discovered. And Shanghai is where the

discovered. And Shanghai is where the metal ultimately ends up. Three markets,

three functions, one price. You know, I think this quote just nails it. It's the

perfect analogy for the whole system. If

the Comx is a casino where people bet on the weather, the SGE is the store where you actually buy the umbrella. One is a place for abstract financial betting.

The other is a place where you go when you need the actual thing to protect you from the storm. It's a brilliant way to think about the fundamental difference between the Western and Eastern markets.

So, the tension between these pillars, it's not going away. It's happening

every minute of every day. And it really leaves us with a huge lingering question about what really determines value in the long run. On one side of the rope, you have the West with a seemingly infinite ability to create new paper contracts out of thin air. And on the

other side, you have the East with a relentless appetite for the world's very finite supply of physical metal. So,

which force is going to dominate the price in the end? The infinite supply of paper or the finite supply of physical?

That is the multi- trillion dollar question, and watching it play out is going to be one of the biggest financial stories of our time. Thank you for watching. Like and subscribe for more

watching. Like and subscribe for more fascinating videos from ComX Physoth.

Have a great day and keep stocking.