The spot market and contracts for difference

When you open an account with a broker and press buy on gold, what actually happens? No bar is shipped to you and no vault is opened in your name. You have entered a contract on the price difference — CFD: Contract for Difference.

What a CFD is

It is an agreement between you and your broker that the difference between the opening price and the closing price will be settled between you, multiplied by your trade size. If price moves your way the difference enters your account; if it moves against you it leaves.