Aug.03 — Wayne Gordon, executive director for commodities and foreign exchange at UBS Global Wealth Management, discusses the outlook for gold and gold stocks. He speaks with Tom Mackenzie and Rishaad Salamat on “Bloomberg Markets: Asia.”
Gold Futures
A future is simply a deal to trade gold at terms (i.e. amounts and prices) decided now, but with a settlement day in the future. That means you don’t have to pay up just yet (at least not in full) and the seller doesn’t need to deliver you any gold just yet either. It’s as easy as that.
The settlement day is the day when the actual exchange takes place – i.e. when the buyer pays, and the seller delivers the gold. It’s usually up to 3 months ahead.
Most futures traders use the delay to enable them to speculate – both ways. Their intention is to sell anything they have bought, or to buy back anything they have sold, before reaching the settlement day. Then they will only have to settle their gains and losses. In this way they can trade in much larger amounts, and take bigger risks for bigger rewards, than they would be able to if they had to settle their trades as soon as dealt.
Continue reading “Gold to Rise to $2,000 by End of Sept.: UBS Global WM”
