3 Exchange Risks of Gold Ttrading

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The risks that gold investors face at exchanges, such as at the COMEX.These risks are 1. margin requirement change, 2. liquidation only, and 3. trading halt ...

The risks that gold investors face at exchanges, such as at the COMEX.These risks are 1. margin requirement change, 2. liquidation only, and 3. trading halt ...

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  • 1. EXCLUSIVE
    3 Exchange
    Risks of
    Gold Trading
    www.goldratefortoday.org
  • 2. Exchange risks refer to the exchanges where gold and futures are traded, and not to currency risks
    The two major gold futures exchanges are the New York Mercantile Exchange (NYMEX) and the Tokyo Commodity Exchange (TOCOM)
    3 Exchange Risks of Gold Trading
    www.goldratefortoday.org
  • 3. Trading at these and all other exchanges is subject to their rules and regulations
    The exchanges can on purpose or accidentally foster market outcomes by changing their trading rules.
    3 Exchange Risks of Gold Trading
    www.goldratefortoday.org
  • 4. What events can happen at an exchange?
    3 Exchange Risks of Gold Trading
    www.goldratefortoday.org
  • 5. 1. Margin Requirement Change
    A margin requirement states how much money needs to be available in the futures account to be able to speculate on future contracts
    The higher the margin requirement, the more money is needed to control the same amount of the underlying asset
    3 Exchange Risks of Gold Trading
    www.goldratefortoday.org
  • 6. If the margin in the margin account is below the margin requirement, then the investor either has to increase the margin, or sell securities
    Thus, rising the margin will in average result in more selling and as a consequence in price droppings
    3 Exchange Risks of Gold Trading
    www.goldratefortoday.org
  • 7. In December 2009, COMEX raised the margin requirements for gold (and silver) contracts
    It was speculated that this increase would result in a bearish future gold market for three to six months
    3 Exchange Risks of Gold Trading
    www.goldratefortoday.org
  • 8. 2. Liquidation only
    Here, the exchange temporarily restricts buying, thus driving the prices down
    COMEX restricted silver buying in 1980, when it reached an all-time high of US$ 50.
    Will the exchange also declare a “liquidation-only” policy on gold, which also trades for a record price?
    3 Exchange Risks of Gold Trading
    www.goldratefortoday.org
  • 9. 3. Halt trading:
    This event is the most extreme measure
    Here, an exchange temporarily halts the trading of a particular future contract
    3 Exchange Risks of Gold Trading
    www.goldratefortoday.org
  • 10. Visit my blog:
    www.goldratefortoday.org
    Live Gold Rates,
    Independent Trading Advise and
    many Resources about Gold Investing
    Interested in More?
    www.goldratefortoday.org