Brieft description and recommendations on investing in precious metals. The presentations talks about keep points for positive returns and rewarding account management strategy.

1. Episode IIII
Techniques of Investing in
Gold
Friday, the 15th of May 2015
1

2. Commodity?
• Commodity is a marketable item (goods or services) produced to
satisfy wants / needs
• Commodities can be:
• basic resources
• agricultural products
• Commodities classification
• soft commodities (grown): tea, coffee beans, soybeans , rice and
wheat.
• hard commodities (mined): iron ore, crude oil, coal, salt, sugar,
aluminium, copper, gold, silver, palladium, and platinum.
2

3. Physical Gold
Production Cycle
3

4. Production Cycle
Phase I
• Miners dig silver and gold ore from the
ground and sell mix ore and dore metal
bars to refiners below spot/current
price.
4

5. Production Cycle
Phase II
• Refiners melt and purify the ore/dore
bars into fine bullion, which are then
sold to mints at a price very close to
spot/current price
5

6. Production Cycle
Phase III
• Mints strike bullion bars/rounds/coins
and sell them to wholesale/retail
dealers at prices just above
spot/current price.
• Dealers sell them to public at their price
discretion.
6

7. Precious Metals
Markets
Gold Markets
7

8. Gold Markets
• Japan - Tokyo gold market (00:00 GMT - 6:30 GMT) then (8:00 GMT -
14:00 GMT)
• China - Shanghai gold market (1:00 GMT - 3:30 GMT) then (5:30
GMT - 7:00 GMT)
• Hong Kong gold market (1:00 GMT - 4:30 GMT) then (6:30 GMT -
9:00 GMT)
• UK - London gold market (8:00 GMT - 17:00 GMT)
• Indonesia - Jakarta gold market (2:30 GMT - 10:30 GMT)
• United Arab Emirates - Dubai gold market (4:30 GMT - 7:30 GMT)
• India - Mumbai gold market (4:30 GMT - 18:00 GMT)
8

9. Gold Markets
• Pakistan - Islamabad gold market (5:00 GMT - 13:00 GMT)
• Turkey - Istanbul gold market (7:45 GMT - 15:30 GMT) then (15:45
GMT - 7:40 GMT)
• UK - London gold market (8:00 GMT - 17:00 GMT)
• Brazil - Sao Paulo gold market (13:00 GMT - 20:00 GMT) then (20:45
GMT - 22:00 GMT)
• US-New York gold market (13:20 GMT - 18:30 GMT)
9

10. Gold Prices
• Driven by supply and demand, and speculation.
• Influenced by:
• central banks announcements and actions,
• reaction to results of economic indicators,
• hedging and stop-loss/take-profit orders,
• industrial demand,
• short selling by speculators,
• gold recycling,
• political instability, and
• national emergency.
10

11. Pricing in
Other Currencies
11
USD Indicator EUR
Price in
EUR
Indicator JPY
Price in
JPY
Indicator
4/17/15 $1,198.60 $1.0807 €1,109.10 ¥118.920 ¥142,538
4/20/15 $1,204.40 0.484% $1.0737 €1,121.73 1.139% ¥119.200 ¥143,564 0.720%
4/21/15 $1,195.80 (0.714%) $1.0736 €1,113.82 (0.705%) ¥119.670 ¥143,101 (0.323%)
4/22/15 $1,202.20 0.535% $1.0727 €1,120.72 0.620% ¥119.920 ¥144,168 0.745%
4/23/15 $1,186.90 (1.273%) $1.0826 €1,096.34 (2.175%) ¥119.580 ¥141,930 (1.553%)
4/24/15 $1,193.00 0.514% $1.0874 €1,097.11 0.070% ¥118.980 ¥141,943 0.010%

12. Pricing in
Other Currencies
12
USD Indicator EUR
Price in
EUR
Indicator JPY
Price in
JPY
Indicator
5/8/15 $1,188.90 $1.1204 €1,061.14 ¥119.810 ¥142,442
5/11/15 $1,183.00 (0.496%) $1.1155 €1,060.51 (0.059%) ¥120.080 ¥142,055 (0.272%)
5/12/15 $1,192.40 0.795% $1.1214 €1,063.31 0.264% ¥119.860 ¥142,921 0.610%
5/13/15 $1,218.20 2.164% $1.1358 €1,072.55 0.868% ¥119.160 ¥145,161 1.567%
5/14/15 $1,225.20 0.575% $1.1402 €1,074.55 0.187% ¥119.170 ¥146,007 0.583%
5/15/15 $1,214.70 (0.857%) $1.1362 €1,069.09 (0.508%) ¥119.860 ¥145,594 (0.283%)

13. Investor?
• to deploy money, by purchase
or expenditure, in something
that can offer economical
benefit as income or
appreciation in value.
• to use money in accumulating
assets.
• to devote time and talent in
order to achieve economical
goal.
13

14. Behaviour of
Account Holders
• Margin Account holders:
• They are Trend Followers
• They increase buying as market goes up and increase selling with
the down trend
• Cash Account holders:
• They go opposite of market trend
• They increase selling as market goes up and increase buying as it
falls
14

15. Infinity and Zero
• Infinity does not exist
• Zero does not exist
15

16. Spot Price
• Spot Price / Current Price is the benchmark price at which physical
gold/silver can be sold or bought at specified time and place.
• This Benchmark Price is calculated according to the most recent
average bid/ask prices by traders
• Factors that affect the Benchmark Price:
• bid/ask prices
• fixing prices
• trades volume
• political instability
• Central Banks actions and announcements
• supply and demand of physical stock
16

17. Spread
• The difference between the bid and ask price
• bid price is the current highest price at which you could sell
• ask price is the current lowest price at which you could buy
• Spread is affected by:
• supply
• demand
• trading volume
17

18. Pricing Equation
• Each product is priced according to below equation:
• Spot/Current Price x Fineness of the Product x Gross Weight of
the Product
• On physical redemption, the buyer will pay the premium
18

19. Overnight SWAP
Interest
• In the world of CFD (Contract For Difference) the overnight swap
interest rate is the interest rate (charge) at which a depository
institution lends quantity of a particular commodity to another
depository institution.
19

20. Unrealised / Realised
Loss/Profit
• Unrealised Loss is the loss that results from holding onto a position
after the price has dropped from the open price.
• Unrealised Profit/Gain is the gain that results from a profitable position
that has yet to be cashed in.
• Realised Loss is when a losing position is closed for loss.
• Realised Profit/Gain is when a losing position is closed for profit.
20

21. Investing
Techniques of
21

22. Pivot Point
• Three prices of previous day: Highest Price, Lowest Price and Closing
Price
• Pivot Point:
• Technical Analysis Indicator used to determine the overall trend of
the market.
• Simply the average of the high, low and closing prices from the
previous trading day.
22

23. Pivot Point
• Pivot Point Formulas: Classic, Fibonacci, Camarilla, and Woodie’s
• Fibonacci Formula:
• Pivot Point = (Highest Price + Lowest Price + Closing Price) / 3
• Support 1 = Pivot - 0.382 x (Highest Price - Lowest Price)
• Support II = Pivot - 0.618 x (Highest Price - Lowest Price)
• Support III = Pivot - 1 x (Highest Price - Lowest Price)
23

24. Support / Resistance
Levels
• Resistance is an upper limit of
price movement in which metal’s
price tends to stay.
• The price at which buyers jump in
to purchase metals, establishing a
floor beneath which it's difficult for
the price to fall.
24

25. Tips
• Follow a standardised Trade Size.
• Maintain an acceptable profit margin.
• Keep a price gap between two consecutive orders of 0.80% of profit
margin.
25

26. Acceptable
Profit Margin
• Acceptable profit margin for each open trade:
• Gold Ounce: TP (Take Profit) to be 0.40% of the open price.
• Silver Kilo: TP (Take Profit) to be 1.20% of the open price.
26

27. Distribution of Orders
Place orders on or around the daily three support prices
27

28. Go Fishing
• Determine the 3 Price Support-
Levels for each Product
• Place buy orders around each
Price Support-Level
28

29. First Year Objectives
• Calculate acceptable Profit Margin that covers commission of open
trades.
• Cover Average Unrealised Loss of open trades with Realised Profit.
• Build up capital from Realised Profit that covers the value of all open
trades.
29
Realised
Profit
Average
Unrealised Loss
Average Value of
Open Trades
Free Stock

30. Redemption
Physical Products
• Rule of thumb says to have 8 to 10% of total wealth in precious
metals
• Accumulate gradually your free stock in physical form
30

31. Real Case
Example
31

32. Pivot Open High S1 S2 S3 Low Closing
04/17/15 $1,198.60 $1,207.80 $1,197.00 $1,203.10
04/20/15 $1,202.63 $1,204.40 $1,209.00 $1,198.51 $1,195.96 $1,191.83 $1,190.80 $1,193.70
04/21/15 $1,197.83 $1,195.80 $1,203.70 $1,190.88 $1,186.59 $1,179.63 $1,192.50 $1,203.10
04/22/15 $1,199.77 $1,202.20 $1,204.40 $1,195.49 $1,192.85 $1,188.57 $1,185.00 $1,186.90
04/23/15 $1,192.10 $1,186.90 $1,197.40 $1,184.69 $1,180.11 $1,172.70 $1,183.60 $1,194.30
04/24/15 $1,191.77 $1,193.00 $1,195.40 $1,186.50 $1,183.24 $1,177.97 $1,174.10 $1,175.00
Gold Prices (Fibonacci)
32

33. Pivot Open High S1 S2 S3 Low Closing
04/24/15 $1,191.77 $1,193.00 $1,195.40 $1,186.50 $1,183.24 $1,177.97 $1,174.10 $1,175.00
04/27/15 $1,181.50 $1,179.30 $1,206.70 $1,173.36 $1,168.34 $1,160.20 $1,177.60 $1,203.20
04/28/15 $1,195.83 $1,201.60 $1,214.90 $1,184.72 $1,177.85 $1,166.73 $1,198.60 $1,213.90
04/29/15 $1,209.13 $1,211.40 $1,213.50 $1,202.91 $1,199.06 $1,192.83 $1,200.70 $1,210.00
04/30/15 $1,208.07 $1,204.50 $1,207.40 $1,203.18 $1,200.16 $1,195.27 $1,176.00 $1,182.40
05/01/15 $1,188.60 $1,183.70 $1,184.40 $1,176.61 $1,169.19 $1,157.20 $1,168.40 $1,174.50
Gold Prices (Fibonacci)
33

34. Pivot Open High S1 S2 S3 Low Closing
05/01/15 $1,188.60 $1,183.70 $1,184.40 $1,176.61 $1,169.19 $1,157.20 $1,168.40 $1,174.50
05/04/15 $1,175.77 $1,176.60 $1,192.10 $1,169.65 $1,165.88 $1,159.77 $1,176.60 $1,186.80
05/05/15 $1,185.17 $1,187.50 $1,199.30 $1,179.25 $1,175.59 $1,169.67 $1,184.90 $1,193.20
05/06/15 $1,192.47 $1,192.50 $1,196.90 $1,186.97 $1,183.57 $1,178.07 $1,187.40 $1,190.30
05/07/15 $1,191.53 $1,191.30 $1,192.00 $1,187.90 $1,185.66 $1,182.03 $1,177.90 $1,182.20
05/08/15 $1,184.03 $1,183.70 $1,193.00 $1,178.65 $1,175.32 $1,169.93 $1,180.50 $1,188.90
Gold Prices (Fibonacci)
34

35. Silver Prices (Fibonacci)
35
Pivot Open High S1 S2 S3 Low Closing
04/17/15 $524.28 $531.67 $522.02 $523.25
04/20/15 $525.65 $524.44 $526.69 $521.96 $519.68 $516.00 $510.13 $512.19
04/21/15 $516.34 $513.67 $520.90 $510.01 $506.10 $499.78 $511.57 $516.01
04/22/15 $516.16 $514.95 $518.01 $512.60 $510.39 $506.83 $504.50 $509.20
04/23/15 $510.57 $507.39 $513.02 $505.41 $502.22 $497.06 $506.11 $510.32
04/24/15 $509.82 $510.61 $512.06 $507.18 $505.55 $502.91 $501.45 $504.18

36. Silver Prices (Fibonacci)
36
Pivot Open High S1 S2 S3 Low Closing
04/24/15 $509.82 $510.61 $512.06 $507.18 $505.55 $502.91 $501.45 $504.18
04/27/15 $505.90 $506.11 $530.22 $501.84 $499.34 $495.29 $505.47 $528.58
04/28/15 $521.42 $527.65 $536.98 $511.97 $506.13 $496.67 $524.92 $534.73
04/29/15 $532.21 $534.40 $537.78 $527.60 $524.76 $520.15 $527.81 $537.04
04/30/15 $534.21 $532.96 $537.94 $530.40 $528.05 $524.24 $508.04 $519.39
05/01/15 $521.79 $519.13 $522.83 $510.37 $503.31 $491.89 $511.10 $518.81

37. Silver Prices (Fibonacci)
37
Pivot Open High S1 S2 S3 Low Closing
05/01/15 $521.79 $519.13 $522.83 $510.37 $503.31 $491.89 $511.10 $518.81
05/04/15 $517.58 $518.65 $539.07 $513.10 $510.33 $505.85 $518.49 $528.65
05/05/15 $528.74 $527.33 $537.14 $520.88 $516.02 $508.16 $525.56 $533.09
05/06/15 $531.93 $531.83 $535.37 $527.51 $524.77 $520.35 $526.85 $530.74
05/07/15 $530.99 $531.67 $532.32 $527.73 $525.72 $522.47 $519.61 $524.02
05/08/15 $525.32 $524.28 $532.32 $520.46 $517.46 $512.61 $522.83 $529.42

38. Recommendations
38

39. Liquidation Level• Calculate the Equity = Account
Balance - Unrealised Loss +
Unrealised Profit
• Determine the Quantity of Each
Product with Open Trades
• Find out the Net Value of Each
Product with Open Trades: Current
Price of the Product x Quantity of
Each Product with Open Trades
• Make summation of all Net Values to
come to Total Net Value of all Open
Trades
• Calculate the Share of Each Net
Value of Total Net Value: Each Net
Value / Total Net Value
• Liquidation Price of Each Product will
be: Current Price - (Share of Each
Net Value x Equity / Quantity of All
Open Trades) 39

40. • Investor NOT a Speculator
• Medium to Long Term
Investor
• The focus is on Overall Return
of a portfolio
• Holding time is from several
months to several years
• Physical Market not Financial
Market
40
Stop-Loss Orders

41. Falling Knife
• Precious Metal experiencing a
rapid drop.
• Do not try to catch a price
while dropping.
• Those precious metals are
safe to pick up after they hit
the ground.
• Find the following Price
Support Level.
41

42. Things to remember!
42

43. 43