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Comment by duxup | Hacker News Reader

That guy on TV keeps telling me how awesome owning gold is... it is so awesome he wants to sell me his...

That guy on TV is a broker. He doesn't want to hold any gold. He wants to sell and buy at the same time and make money off of the spread.

Not sure if the answer is obvious here but I don't know much about finance, does 'spread' here mean the difference in the asset price from purchase/sale time (whether by market change or artificial markup) or the brokering fees involved? or both?

#2:

Any vendor will buy a good at say, $9 and sell at $10. In the US there are many pawn shops saying "We buy and sell gold!" - it's never at the same price.

#1: A smart gold trader will buy low, sell high.. they will buy more gold when prices are low and advertise to sell more when the price is high.

Spread is, simply, the difference between the buying price and the selling price. Usually in the context of stocks.

Brokering fees are not calculated in with the base prices, though it would be once it's time to calculate returns.

That's not what a broker does. A broker is basically in sales. He takes company research done by analysts and tries to sell you company financial products. He doesn't care which direction you go as long as you do something so he can take his commission, and a little extra if you are buying a company product he might be trying to push.

A market maker is the guy who's tying to capture the spread, but they don't really go around trying to get the public to buy and sell.

If they're selling pure gold at less than or equal to $800/oz then it's well worth it at this very moment with gold trading around $1200/oz right now. 50% profit ain't shabby.

Hmm, facts don't seem to be well-tolerated around here.

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