09 · Precious Metals and Energy Spot: How to Participate in Gold, Silver, and Crude Oil

This article is an asset map: panorama and core concepts only. For a deep dive into the futures mechanics, see Chapter 3 · Futures↗.

The previous article, 06 - Commodity Panorama↗, covered the global pricing centers and core drivers of commodities; this one answers a more practical question: gold, silver, crude oil — what can you actually buy?

There are at least ten thousand ways to "buy gold": bars from a jewelry store, bank paper gold, gold ETFs in a securities account, gold T+D on the exchange, London gold on an offshore platform... They all have "gold" in the name, but their thresholds, leverage, and risks differ wildly. Crude oil is even more so — you can hardly ever buy "a barrel of spot crude"; you can only buy a pile of its derivatives. This article lays these forms out side by side, plus how to spot the most dangerous scams in history.

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⚠️ Risk Warning

This article is for learning and research only and does not constitute investment advice. The fee rates, margin ratios, leverage multiples, trading hours, and product codes mentioned here are generic teaching-basis descriptions — always defer to the latest rules and quotes of each bank/exchange/platform. London gold, CFDs, and gold T+D are all high-leverage derivatives, and in 2020 WTI crude futures once fell to -37.63 USD/barrel — for tools of this risk level, read the risk warning at the end before talking about returns.

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① Common Forms of Spot Gold, Compared

The forms of "gold" an ordinary person can access fall into five broad categories. First the overview table, then a one-by-one breakdown:

Item	Physical bars/coins	Bank paper gold	Gold ETF	Gold T+D	London gold electronic platform
Trading venue	Jewelry stores/bank counters	Bank account (book-entry)	Shanghai/Shenzhen exchanges	Shanghai Gold Exchange	Offshore OTC platforms
Physical delivery	Yes (it is the physical metal)	No (book-entry; converting to physical requires fees)	No (the ETF maps to SGE gold bars)	Delivery can be declared	No
Entry threshold	From about 1-10 grams, a few hundred to a few thousand yuan	From 1 gram (per each bank's latest rules)	One lot = 100 shares, about a few hundred yuan	One lot = 1,000 grams ≈ RMB 0.6-0.7 million notional, margin about 10%	From 0.01 lot, extremely low threshold
Leverage	None (fully paid)	None (fully paid)	None (fully paid)	About 10x (margin-based, per latest)	Dozens of times or more, even 100-200x
Trading hours	Business hours; wide buy-sell price spread	Bank quote sessions, T+0 supported	T+0, same-day buy and sell	Day session + night session until 02:30 next day	Nearly 24 hours
Cost structure	Purchase premium + resale discount (the buyback price sits well below the sale price)	Spread (the bid-ask difference)	Management fee (about 0.5%/yr) + brokerage commission	Fees + deferral fee (overnight holding fee)	Spread + overnight interest, plus hidden platform fees
Liquidity	Poor (cashing out depends on the channel)	Fairly good	Excellent (on-exchange matching)	Good	Varies by platform
Risk level	Low (but you lose on resale)	Low	Low	High (leverage)	Highest (leverage + platform risk)

Physical gold bars / coins

• Entry threshold: jewelry stores/banks price by the gram in common specs such as 1g, 5g, 10g, 100g, converted at the latest gold price; you can start with a few hundred yuan.
• Premium and resale discount: buying a bar means paying "workmanship fee + brand premium" (far worse for gold jewelry, where craft fees can reach hundreds of yuan per gram); selling goes through "buyback" channels, and the buyback price is usually a few to a few dozen yuan per gram below the international gold price (per the latest spread). One round trip can eat 3%-10%.
• Conclusion: physical gold suits long-term value preservation and hedging extreme risk (a bar kept at home), not short-term in-and-out trading. Commemorative coins/jewelry carry higher premiums and are the worst as investments.

Bank paper gold

• "Virtual grams" in a bank account, bought and sold at the bank's gold quote — fully paid, no leverage, T+0.
• The only cost is the spread, with no workmanship fees; but trading hours are limited to the bank's quote sessions (usually tracking the active international gold hours), not 24 hours.
• Note: some banks have suspended new paper gold business or raised thresholds (per the latest rules); paper gold earns no interest and cannot be redeemed for physical metal (or only at high cost).

Gold ETF

• On-exchange ETFs (e.g., gold ETFs, gold ETF funds, Shanghai gold ETFs; codes per latest), one lot = 100 shares, with NAV mapped to SGE spot gold contract prices.
• Traded T+0 inside a securities account like a stock, no stamp duty (per the latest fee policy), management fee about 0.5% per year.
• The gold tool best suited to ordinary people: low threshold, high liquidity, low cost, no leverage, and you can accumulate gold through fund dollar-cost averaging (gold ETF feeder funds support off-exchange DCA).
• Derivative uses: a gold ETF can serve as a hedge for the spot position and as collateral (supported by some brokers), with a trading experience identical to stocks.

Gold T+D

• A spot deferred contract of the Shanghai Gold Exchange (T+D = Trade + Deferred), one lot = 1,000 grams, margin trading, leverage about 10x (margin ratio adjusted dynamically by the exchange, per latest announcements).
• Trading hours come in segments: day session + night session (21:00 to 02:30 next day); the night session covers the European and American trading hours, making it one of the first-choice tools for trading gold moves domestically.
• A unique cost: the deferral fee — holding overnight means paying/receiving the long-short swap deferral fee (rate per the exchange's latest rules); long-term positions get continuously eroded.
• How to participate: open an account through banks/brokers/futures firms with SGE membership. Leverage cuts both ways, and blow-up risk is real.

London gold electronic platforms (spot gold OTC)

• The concept originates from "spot gold" in the London bullion market (the LBMA OTC market), but what retail investors actually touch are CFD-style electronic platforms run by offshore brokers: billed as "London gold/spot gold", they are in fact high-leverage OTC contracts betting against the platform (the market maker), with quotes tracking the international gold price.
• High leverage (commonly 50-200x), nearly 24-hour trading, minimum 0.01 lot — this is the worst disaster zone of global precious metals "black platforms".
• Participating in London gold from mainland China: there is no legal domestic channel. Anything marketed as "London gold" or "spot gold" that gets mainland users to open accounts and deposit is, in the vast majority of cases, an offshore black platform or a domestic betting desk (see ③ Key Warning↗ below and ④ of Scam Detection↗). The advice is to simply give up on this form.

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② Spot Silver: Paper Silver / Silver ETFs / London Silver

Silver's investment forms map one-to-one with gold's, but the volatility is completely different — it is a metal with dual "industrial + financial" character: industrial demand such as photovoltaic silver paste, electronics, and silverware takes the lion's share, while it also has safe-haven character following gold.

Form	Gold counterpart	Characteristics
Paper silver	Paper gold	Bank book-entry, fully paid, no leverage, spread cost
Silver ETF/LOF	Gold ETF	On-exchange trading, e.g., silver futures LOFs (codes per latest); offshore SLV etc. as well
London silver (electronic platform)	London gold	Offshore OTC high leverage, a black-platform disaster zone

• Higher volatility: silver's volatility is about 1.5-2x gold's — it surges harder in bull markets (it is called "the poor man's gold") and falls harder in bear markets. Industrial character is a double-edged sword: when the economy is good, industrial demand adds fuel and rallies have big elasticity; when the economy is bad, industrial demand shrinks and safe-haven money only recognizes gold, so the downside has no floor.
• Silver's supply-demand structure is more "hard-constrained" than gold's: gold inventories are mostly central-bank reserves with good liquidity; most silver is consumed by industry, the recoverable supply elasticity is small, and emerging demand such as photovoltaic silver keeps the supply-gap story fermenting again and again (per latest data).
• The gold-silver ratio (gold price ÷ silver price) is the classic gauge of whether silver is "expensive" (see ⑤↗): a very high ratio (silver relatively cheap) has historically often been followed by silver catch-up rallies.
• Participation note: silver ETFs are the most convenient form for domestic retail; silver futures (SHFE AG) belong to the futures chapter and are not expanded here. London silver is the same story as London gold — do not participate through any "spot silver" platform.

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③ The Truth About "Spot" Crude Oil

Why there is no true spot crude oil

Ordinary investors cannot buy "a barrel of spot crude", because physical delivery has three fatal flaws:

1. Storage: crude oil needs tanks/pipelines/tankers; one barrel (about 159 liters) has nowhere to sit at home; "buy a barrel and wait for prices to rise" is physically infeasible.
2. Transport: crude from different origins must be shipped to refineries/delivery hubs; freight, shipping schedules, and pipeline fees constitute enormous carrying costs.
3. Quality standards: crude has dozens of quality grades (differing sulfur content, API gravity) and must be delivered in standardized form at designated delivery points under specific quality standards (e.g., the WTI standard, the Brent standard) — it is not "just any barrel of oil".

So the global "crude oil price" is essentially a futures and index price; the spot market exists only in OTC agreements among producers, traders, and refiners. What retail can access are only crude derivatives.

Common participation routes

Route	Instrument/code examples	Characteristics	Risk note
Crude futures	INE SC (domestic), NYMEX CL (WTI), ICE Brent	Futures on margin, the mainstream tool; SC is RMB-denominated	Built-in leverage; in April 2020 the WTI May contract settled at -37.63 USD/barrel (negative oil)
Crude ETFs/funds	Offshore USO and other oil funds; no direct domestic crude ETF (per latest; requires QDII)	No futures account needed, trade like stocks	USO and similar suffer futures roll decay and premium issues over long holds (see below)
CFDs	"US oil/UK oil" CFDs on offshore platforms	High leverage tracking oil prices	Offshore black-platform disaster zone; no legal domestic channel
Oil funds (QDII)	e.g., Southern Crude, E Fund Crude (on-exchange LOFs, per latest)	Track crude futures or oil funds, T+0 on exchange	Have seen large on-exchange premiums (NAV and price diverging by 20%+), and scale is limited by QDII quotas

Key points about USO and other offshore oil funds:

• USO tracks crude futures contracts, not the spot price, and must "roll" every month (selling the expiring contract, buying the deferred one).
• When the market is in a contango structure (deferred contracts more expensive than nearby ones), every roll "buys high and sells low", producing continuous roll cost — hold USO long term and the NAV gets eroded even if oil goes nowhere, with cumulative decay potentially 10%-30% per year (depending on the specific fund and market structure).
• The premium problem: domestic QDII oil funds are constrained by FX quotas, and their on-exchange prices often sit far above NAV (historical cases of 20%+ premiums); investors who chased the highs were crushed when the premium reverted. Before buying any oil fund, check the "NAV - market price" premium rate.

Roll decay, back-of-envelope (illustrative, not real numbers): suppose oil is at 80 USD/barrel and the deferred contract is 2% more expensive than the nearby one (contango); rolling monthly means "sell the nearby, buy the deferred", i.e., paying about 2% per month. A year of cumulative decay ≈ 1 − (0.98)^12 ≈ 21.5% — even if oil goes sideways for a year, the fund NAV gets ground down by about a fifth. That is the root cause of "oil unchanged, USO losing money" (actual decay varies with the backwardation/contango structure; per latest).

A 2020 negative-oil post-mortem: on April 20, 2020, the WTI May contract (about to be delivered), with storage nearly full and longs forced to liquidate, settled at -37.63 USD/barrel — holders actually had to pay extra to have the oil taken away. That day demonstrated to every holder of a "crude oil investment product": the risk of unstorable spot gets priced in the most extreme way possible.

Key Warning: Domestic "Spot Crude Oil" and "Spot Silver" Platforms Are a Hotbed of Betting Desks

⚠️ Read this paragraph three times. "Domestic spot crude oil/spot silver/spot gold" trading platforms were the historic disaster zone of Chinese financial fraud in 2011-2015, and today they still resurface in all kinds of disguises.

• Historical background: in 2011-2015 the country saw a flood of "commodity spot exchanges" (represented by the Tianjin Precious Metals Exchange and various "XX commodity trading centers", including 8 named precious metals exchanges). They billed themselves as "spot crude/spot silver/spot gold" under banners like "CSRC approval" and "state support", when in fact:
  • The platform bets against its clients: client losses = platform profits. The platform never routed orders into a real market (no external execution); what clients bought and sold were merely numbers inside the platform.
  • Behind it sat a market maker + member unit (agent) chain of profit splits: the "analysts" who developed clients earned from client commissions and a share of client losses — the more clients lost, the more they made.
  • Supporting tricks: signal groups, live-stream trade calls, frequent advice to "add positions" or "hold through the drawdown", back-end quote manipulation/platform freezes/withdrawal blocks, until the client was wiped out and the platform and agents split the money.
• Status quo: the 2015-2017 regulatory clean-up shut hundreds of venues and held people accountable; but venues repackaged under names like "FX/precious metals/crude managed trading" and "high-leverage spot outside A-shares" still exist (mixed domestic+offshore servers, funds routed through personal accounts or underground banks).
• Identification checklist (hit any one item, exit immediately):
  1. Marketed as "spot crude/spot silver/spot gold/London gold", but not matched on an exchange — you open the account through a "member unit/agent";
  2. Deposits go to a personal account or a frequently changing company account (instead of third-party custody);
  3. A "teacher/analyst" proactively pulls you into groups, calls trades in live streams, posts profit screenshots, and promises "capital-guaranteed high returns";
  4. High-leverage marketing (50x, 100x), "zero threshold, 1-minute account opening", agent referral kickbacks;
  5. Withdrawals delayed or frozen for all sorts of reasons, or requiring a "deposit to unlock withdrawals";
  6. No financial license can be found on the platform's website, and the claimed "approval" cannot be verified on the CSRC/PBOC official sites.
• The full scam playbook and more cases: 02 - Scam Detection↗ (④ fake exchanges/black platforms, ⑤ contract signal-group scams).
• One-sentence summary: the only legal domestic routes into precious metals/crude are the SGE (gold T+D), SHFE/INE (gold/silver/crude futures), on-exchange ETFs, and bank precious metals business. Anything where "a platform opens an account for you to trade spot crude/London gold" should be treated as a scam.

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④ Pricing Anchors: London Gold / Shanghai Gold / WTI / Brent

The prices of every form of precious metal and crude ultimately anchor to a few "pricing benchmarks":

Pricing anchor	Full name/venue	Mechanism	Who uses it
London gold (LBMA fix)	London Bullion Market Association price fix	Formed twice daily (10:30/15:00 London time) by market-maker auction, now conducted as an electronic auction	The pricing benchmark for global physical gold, jewelry, and paper gold
Shanghai gold benchmark	Shanghai Gold Exchange "Shanghai Gold" centralized pricing	Two centralized auction sessions daily producing an RMB-denominated gold price	The pricing benchmark for domestic jewelry, bars, T+D, and gold ETFs
WTI	New York Mercantile Exchange (NYMEX)	The US shale benchmark, with delivery at Cushing	The US market; the tracking target of USO and other funds
Brent	Intercontinental Exchange (ICE)	North Sea crude as the benchmark for global seaborne trade pricing	The pricing benchmark for about 2/3 of global crude trade

• The gap between London gold and Shanghai gold (FX + time zones + supply-demand) is the "onshore-offshore spread", one of the core variables of gold ETF NAV.
• Shanghai gold and London gold form at different times: the London fix is set twice daily (10:30/15:00 London time, around 17:30/22:00 Beijing time, per daylight saving), while Shanghai gold comes from two daily centralized auctions — the difference between the two quotes at any given moment is itself a window into domestic vs international gold supply and demand.
• The WTI-Brent spread is itself an important trading indicator: a widening spread often signals loose US supply or tight global shipping; a narrowing/inverted spread signals tight US supply (per latest).
• Domestic SC crude uses Middle East crude as its underlying, RMB-denominated, and carries a spread to WTI/Brent (freight, quality, FX) — it is not simply "the Chinese Brent".

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⑤ Gold-Silver and Oil-Gold Ratios: Common Sense on Two Classic Ratios

Ratio	Formula	Historical common ranges	Meaning
Gold-silver ratio	Gold price ÷ silver price	Center around 60-80; historical extreme: spiked to 120+ in the March 2020 pandemic panic, and has mostly ranged 40-90 since 2008 (per latest data)	Very high ratio → silver undervalued relative to gold (historically often followed by silver catch-up rallies); very low → silver relatively expensive
Oil-gold ratio	Crude price ÷ gold price	No fixed center; a macro-sentiment indicator	High ratio → the market prices "strong economy, high inflation"; low ratio → haven demand dominates (gold strong, oil weak in recession/crisis); oil-gold ratio collapses occurred in both the 2008 crisis and the 2020 pandemic

• Usage note: ratios are statistical common sense, not trading signals. At a gold-silver ratio of 120, "long silver" still saw the ratio climb to new highs — extremes can get extreme; use them together with position management.
• Current-range judgment: while the gold-silver ratio sits inside its historical range (60-80), the two mostly rise and fall together and the ratio itself has limited reference value; only when the ratio pushes toward historical extremes (e.g., >100 or <50) does it carry directional information (per latest).
• Extension: the copper-gold ratio (the "spread sentinel" of economic activity) is detailed in the end-of-article checklist of 06 - Commodity Panorama↗.

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⑥ Recommended Participation Routes by Purpose

Your purpose	Recommended tool	Notes
Long-term value preservation, hedging extreme risk	Physical gold bars (bank channel)	Insist on brand and buyback commitments; about 3%-10% round-trip cost, only "buy and never sell" averages it out

| Small regular gold accumulation | Gold ETF feeder fund DCA | No leverage, low fees; ignore short-term noise when holding long term | | Flexible on-exchange gold trading (T+0) | Gold ETF / Shanghai gold ETF | Just a securities account; no stamp duty (per latest policy) | | Domestic intraday/swing gold (incl. night session) | Gold T+D (SGE) | About 10x leverage; mind the deferral fee and the blow-up line; practice with small positions first | | Domestic speculation on high-volatility gold/silver/crude | SHFE gold AU, silver AG, INE SC futures | Futures-chapter territory; leverage and forced liquidation rules in 03 - Futures↗ | | Silver elasticity allocation | Silver ETF / silver LOF | Volatility is 1.5-2x gold's — treat the position as halved | | Bullish/bearish on oil (can stomach the swings) | SC crude futures, QDII oil funds | For QDII funds, check the premium rate first; watch roll decay over the holding period | | Cross-border allocation (with offshore accounts) | Offshore gold/oil ETFs (GLD, SLV, USO, etc.), CME/ICE futures | USO-type products decay heavily long term; compliance boundaries of offshore accounts in 08 - Pitfalls / 03 - Compliance & Taxes↗ | | Being pitched a "spot crude/London gold/spot silver" platform | Do not participate | No legal domestic channel; exit immediately per the scam identification checklist↗ |

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Risk Warning