How Is Gold Traded On The Stock Market?
With the expansion of trading in Gold movement as a desired commodity investors, the need has grown to more tools that contribute to the speed of completion of the purchase of the precious metal and sell it.
The gold traded in the futures exchange the most important tool in this regard, while the price movement has evolved dramatically since the decoding dollar / gold link ($35 an ounce) of President Nixon in 1971, and the resulting rise averaged 2200% in its price, during the the 9 years that followed the decision.
The total price per ounce around $800 in 1980, before it enters the downward path for 19 years with almost reached $ 260 in 1999, reflecting the trend to climb with attained a new record high, above $1900 in September 2011.
Many who follow the yellow metal price movements may not know how trading gold through futures exchange and a “CMI”, which is the world’s largest commodity futures contracts are generally market.
How gold up to warehouses Futures Exchange?
It’s not complicated: after obtaining the gold high its quality, having mined, or if it is in the form of junk “on the body break down and spare Used ornaments and jewelry,” and purified, and the production of alloys in the labs and companies refined standard specifications accepted, Penny Millionaire is ready for delivery.
It is understood that bullion and gold bars produced, are either owned refining companies that have already bought from mines, or are those companies purify the material and refining to external customers.
It must be working in this area are of companies registered trademark and recognized groups such as “Heraeus” German, which was founded in the mid-19th century ago, and that does not stop her work only for gold, but also silver and other precious metals.
How is the transport process? Who does this?
After the production of gold bullion standard uninterrupted, comes the role of companies specialized in security systems for transport to the warehouse stores “Comex”, nor can the process is done only by certified and reliable companies.
In the case of exit alloy and gold bars from the Futures Exchange warehouses, the “CMI” group can not guarantee its survival within the scope of the criteria and standards known, and if desired the owner in the back again, must be done by the companies mentioned above and in the same way.
When gold bullion become tradable on the stock exchange like stocks and others?
After the arrival of bullion to the Futures Exchange warehouses in the right way, to become “eligible for trading”, as liberation “receipts” delivery, Tesler Trading becomes the gold equities “registered”.
And working those receipts that can be passed down from one party to another, while the holder to pay the storage costs, and in the most part, those receipts remain with the brokerage firm, which is mediating in circulation, and the longer cases keep people out are very rare, they are like trading stocks and bonds that are not traders look to acquire them, but to make a profit from it.
What is the relationship between gold stocks and the movement of prices?
There is a relationship between the gold found within the exchange store at the COMEX, and the movement of prices, which are shown in the drawing, chart, taken from “BullionVault” as the stock tends to decline with falling metal prices of precious, that is, the relationship between them is a positive by the drawing, which represents a little more than 18 years.
How is the exchange of futures contracts that represent the gold?
The futures contract is an agreement to deliver a specific amount at a specified time in the future, while there remains a large amount of liquidity in the market as a result of the financial levers that allow the payment of a small amount of money, and get fold-fold, according to brokerages to buy a large quantity of gold.
And try working in this field, both companies hedge in the mines, jewelry manufacturers, and others, winning against volatility in this market buying futures contracts, but shared by the speculators want to make a profit from rising prices and low.
For this reason, most of those contracts deals are terminated before the scheduled delivery date, and not only for gold, but for all commodity contracts almost, which means that the vast majority of participants in the market of speculators.
But there are some companies, as mentioned, you want to hedge, such as the unity of the jewelry industry against the risk of price movements and then enter the market of contracts for the sale of some of them.
To illustrate, suppose a goldsmith needs to 100 400 ounces for the manufacture of ring, and it probably will take about two weeks to finish production, while the jeweler does not want exposure to the dangers of price movement, what should he do?
Turning to the futures market for the sale of contract “100 oz” through the competent stock market, while at the same time buy gold in kind needed to manufacture those of the Rings “100 oz”, ie fading thereby exposed to risks of price volatility, Penny Millionaire is through this hedge, and after completion of the manufacturing process rings sold during the two-week buys a forward contract which he sold.
Thus it continues trading in the futures market speculators are trying to push prices in one direction, which is determined by many factors, including the industry itself and its fundamentals, coupled with the fact that one of the most important gold safe havens used by investors in times of crisis.