For it to work at its best you should have it XLR all the way from the source to preamp to power amp.
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The only real advantage you gain is a reduction of noise when using long interconnects. There is no significant sonic improvement. The post above is not really correct, in that you can use balanced cable with XLR's at any point in your system where hum and noise caused by cables is a problem, and it will probably reduce it or even completely eliminate it.
There is a big difference between XLR and RCA interconnections if the system components are truely of a balanced design. First, the third wire, in the XLR is a case ground which ties all the components chasis ground togethers, hence no hum due to stay voltage potentials, just like the ground line from turntable. Second, the neutal line is isolated from chasis ground in balanced designs so it is not subject to any voltage influences via the chasis where as in an RCA set-up, neutral and chasis ground are one in the same. Third, the polarities of the plus and neutral are reversed in the left versus right channels so that your signals are out of phase initially. This reduces the output load on your power transformer by almost half thus providing a much higher gain signal. About a 6db difference in most cases. The out of phase signal also help cancel any line noise. The signal is reinverted at the other end and thus in phase at your speakers. The reason that this circuit topology is not more common is that it is expensive to implement correctly. Every switch in the preamp grows by a magnitude of four, as well as added isolation of signals and provisions for RCA connections still need to be supplied in order to satisfy market compatibility. In almost all cases balanced versus SE RCA is superior. Problem is that if you mix RCA and balanced at any point in the system you lose much of its benefits but still may gain some reductions in noise levels. Regards.
Lost failed to live up to his name and is totally correct. In many cases RCA wires will sound better that balanced because in designs that are not really balanced, there is just an op-amp at the output of the component generating the balanced output. Thus you are just adding more circuitry to the signal path if that is the case. However a component like those in the Pass X series that has been designed as a balanced component can make much better use of the balanced signal.
PEOPLE it depends on the equipment. On how its designed, wither the circuitry is designed balanced or not. For example even thougth Spectral has balanced out. Every notice why all dealers use RCA? Because its designed for single ended. They just provided the XLR because uninformed people out there automatically assume that if it doesn't have XLR its not good. Look at Conrad-Johnson. They ONLY have single ended even in their $15,000 Art preamp. And it still sounds damn good. Some big name brands like Audio Research, Krell (bright and sucks) and Mark Levinson (boring and not worth the price) sound better balanced. If your components do or not depends on your equipment. Ask your dealer.