The largest precious metals dealers buy and sell millions of ounces of bullion each month, which means they have to be careful that they are not on the wrong side of one of these big price swings. Large price movements, both up and down, can potentially wipe out or endanger smaller dealers that aren’t careful with their inventory.

Over time, bullion dealers have developed a way to hedge against these market risks, to make business safer and more predictable for both them and their customers.