what is XAU

Water Cooler Investing
#1

I have started a new job and I hear people around me trading XAU USD, I am not sure what is actually being traded. They tell me its just XAU as a currency… How does this work? Is there any real gold behind this somewhere…

#2

There should be but I’m not sure anymore whether there is or not. Those are always traded as non-deliverables so delivery is always in form of cash instead of physical.

#3

thanks, teh whole gold trade seems to be mostly paper based and little gold backing up all those trades. Unf seems noone has full understanding as the bullion banks are very secretive, so I have people who trade it and dont understand it!

#4

It’s paper trading, but with some singularities:

1 - In some markets, like FOREX, gold is traded in pure speculation; 2 - Unlikely ETFs, you are not acquiring anything that gives you garantees or interest on that; 3 - But of course, you can buy shares of gold in form of ETFs; 4 - In this case you’ve mentioned, you are trading “paper gold”, but the provider has it backed up.