Chief marketing officer, easyMarkets. Previously leading the Risk Management team responsible for offsetting market risk. Extensive background within the financial markets, specializing in derivatives

After 306 events, 28 sports, 11,551 athletes and thousands of medals awarded, the 2016 Olympic Games in Rio have come to a close. The games made famous for handing out gold, silver and bronze medals to its top performers will sunset for another two years, when the winter athletes descend on Pyeongchang, South Korea. But if you’re a commodities trader, the exchange of gold, silver and industrial metals doesn’t end with the closing ceremony. In fact, precious metals trading is just gearing up.

Traders may know a thing or two about how gold and silver are mined and valued in the financial markets, but few know about the round medals that are handed out during the Olympics. In the following article, we look at five Olympic medal facts and how they contrast with the financial markets.

Fact1: Gold metals are made mostly of silver.

Going for gold at the Olympics isn’t what it used to be. The last set of Olympic medals to be made of solid gold were awarded at the 1912 Games in Stockholm, Sweden. The use of gold would rapidly decline over the next several decades with the onset of the First and Second World Wars.[1]

Olympic gold medals are actually made from 92.5% silver and only 6 grams of gold. All medals must be at least 60 millimeters in diameter and 3 millimeters thick.[2]

In the financial markets, precious metals can be bought and sold in various ways, including in physical form, futures contracts, exchange-traded funds (ETFs) or buying stocks of companies involved in gold and silver mining. As a general rule, gold and silver futures are priced in dollars and sold in troy ounces. A troy ounce is an imperial measure that is defined as exactly 31.1034768 grams.

Fact 2: The “value” of gold medals isn’t what you think.

You might think Olympic medals are worth a lot, but it depends on who you ask. The scrap value of a medal, which refers to its worth once melted down, is a little more than $500. As it turns out, silver and a few grams of gold spread out of 60 millimeters isn’t a whole lot.

But if you’re a collector, the value of an Olympic medal could be worth over $1 million. The last of four gold medals won by US Olympian Jesse Owns in 1936 sold for $1.47 million in 2013.[3] As you can see, value is subjective.

Not so in the financial markets. The prices of gold and silver are determined by market forces, including supply/demand, monetary policy and the performance of other assets.

Fact 3: Athletes bite their medals for a reason.

One of the most common poses at the Olympic podium is athletes chomping down on their prized medals. According to David Wallechinsky, co-author of The Complete book of the Olympics, athletes do this to satisfy the media and hundreds of photographers at the event.

“It’s become an obsession with the photographers,” says Wallechinksy. “I think they look at it as an iconic shot, as something that you can probably sell. I don’t think it’s something the athletes would probably do on their own.”[4]

Unfortunately, the media can also influence the financial markets. Speculation from various media sources and “top picks” from experts can actually influence the direction of a market that’s often swayed by herd dynamics.

Fact 4: The design of Olympic medals varies with each host country.

Each set of Olympic medals are designed by the host country’s organizing committee. However, the size and material guidelines outlined above must be met.[5]

On the other hand, gold bars that are mined and then bought and sold on the market typically vary in size and can even be minted into coins. The so-called kilobar, which is 1,000 grams in mass, is one of the most widely used in trading and investment because it’s easier to transfer and manage. Typically, gold bars are either flat or brick shaped.

Fact 5: Bronze consists primarily of copper and other base metals.

Bronze is an alloy that comes primarily from copper and a smaller percentage of tin and other metals, such as aluminum, nickel or zinc. These additions give bronze more hardness and machinability than just copper alone.

Bronze isn’t a common element in the financial markets, but its constituent parts are bought and sold every day on the futures market. Copper, aluminum, nickel and zinc and other industrial metals can be found on the London Metal Exchange. These markets are subject to the same forces as supply and demand as precious metals.

[1] Melonyce McAfee (August 10, 2012). “Why Olympians bit their medals.” CNN.

[2] Jennifer Rosenberg. “Interesting Olympic Facts. About Education.

[3] Ethan Wolff-Mann (August 5, 2016). “How Much Is An Olympic Gold Medal Really Worth? Here Are 4 Possible Answers.” Time.

[4] Melonyce McAfee (August 10, 2012). “Why Olympians bit their medals.” CNN.

[5] Jennifer Rosenberg. “Interesting Olympic Facts. About Education.

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