ACCELERATED SUPPLY Gold reaching the market through mine hedging and finance transactions before it is physically produced - generally created by producer hedging or finance transactions
ACCOMMODATION TRADING Non-competitive trading entered into by a trader, usually to assist another with illegal trades.
ALIQUOT A small representative sample taken from a gold bar for assay to determine its fine gold content.
ALLOCATED ACCOUNT An account in which the client's metal is individually identified as his, and physically segregated from all the other gold in the vault; in the event of a default by the holding bank, the investor becomes a secured creditor.
ALLOY A mixture of two or more chemical elements, including at least one metals. In the ase of gold, it is mixed with a baser metal or metals to lower the purity, influence the colour or add durability."
AMALGAM A mixture with mercury and silver, gold, copper or another metal, known since classical times. A major use is in dentistry
AMERICAN-STYLE OPTION An option which can be exercised at any stage during its life, at or before expiration date
ANODES Positively polarised electrodes in an electrolytic cell; copper content about 99.5%.
ANODE SLIMES A product of the copper tankhouse which settles on the bottom of an electrolytic cell as the copper anodes dissolve and which also adheres to the remains of the anodes. The precious and non-soluble components of the anode are enriched in the anode slimes (e.g. silver, gold, selenium, lead).
ARBITRAGE The purchase/sale of a contract on a market and the simultaneous taking of an equal and opposite position, usually on another market, to profit from discrepancies in the price and/or currencies involved."
ASIAN-STYLE OPTION An option which, if it expires in-the-money, is automatically settled on the basis of the difference between the strike price and the average price of the underlying asset in a given period prior to expiration."
ASK The price a seller asks for the commodity. (also see "offer")
ASSAY The testing and evaluation of a metal to determine its fineness or purity. There are often minimum standards that must be met.
ASSAYER A tester of precious metals to determine their purity.
ASSAY MARK The stamp by an assayer on a bar or piece of precious metal to guarantee its fineness
AT-THE-MONEY Refers to an option in which the strike price which is equal to the current market price of the underlying asset.
AVERAGE STRIKE OPTIONS Asian-style options where the ultimate settlement depends on an average strike price rather than an average underlying asset price.
AVERAGING A method whereby a smoothing of the fluctuations in price movements may be achieved by agreeing to buy or sell a specified total quantity of gold or silver on the basis of the average price of the gold or silver fixings over an agreed period of time.
B
BACKWARDATION When the price for immediate delivery of a commodity is higher than the price of delivery for a future date.
BASE METAL Non-ferrous metal, excluding precious metals (See www.basemetals.com for detailed up-to-date news on all base metals)
BARRIER OPTION An exotic option that either comes to life (is knocked-in) or is extinguished (knocked-out) under conditions stipulated in the options contract. The conditions are usually defined in terms of a price level (barrier, knock-out or knock-in price) that may be reached at any time during the lifetime of the option. There are four major types of barrier options: up-and-out, up-and-in, down-and-out and down-and-in. The extinguishing or activating features of these options mean they are usually cheaper than ordinary options, making them attractive to purchasers looking to avoid high premium.
BASIS PRICE The reference price used for establishing a physical contract. In option trading it is the price agreed for the underlying should an option be declared, more commonly referred to as the strike price or exercise price.
BE COPPER Best electrolytic copper; features particular electrical conductivity, good brazing properties and excellent hydrogen resistance.
BLISTER COPPER Unrefined porous copper. Molten copper absorbs gases more easily than copper in solid form. During solidification, dissolved gases in such copper form small blisters in the copper.
BEAR Someone who anticipates that prices will fall.
BEAR CALL SPREAD The purchase and sale of call options at different exercise prices but with the same expiry date. The purchased (or long) calls have a higher exercise price than the written (or short) calls. The investor expects a fall in the price of the underlying asset.
BEAR MARKET A market in which the trend is for prices to decline.
BEAR PUT SPREAD The purchase and sale of put options at different exercise prices but with the same expiry date. The puts purchased have a higher exercise price than the puts written. The investor expects a fall in the price of the underlying asset.
BETA The beta of a rate or price is the extent to which that rate or price follows movements in the overall market. If the beta is greater than one, it is more volatile than the market; if the beta is less than one, it is less volatile.
BID The price at which a dealer is willing to buy.
BLACK-SCHOLES MODEL An option-pricing model initially derived by Fischer Black and Myron Scholes in 1973 for securities options and later refined by Black in 1976 for options on futures.
BLAST FURNACE A furnace where mixed charges of oxide or sulfide ores (copper, iron, lead, tin, etc.), fluxes and fuels are blown with a continuous blast of hot air and sometimes oxygen-enriched air to force combustion for the chemical reduction of ores with metals to their metallic states.
BORROWING One form of carry. In this case the simultaneous buying of metal for a near dated prompt and the selling of that metal for a later dated prompt. In effect the party is borrowing the metal for the period.
BROKER An intermediary between traders for physical, futures and over-the-counter deals. Brokers receive a fixed commission predetermined between the broker and his/her client.
BULL Someone who anticipates that prices will rise.
BULL CALL SPREAD The purchase and sale of call options at different exercise prices but with the same expiry date. The purchased (or long) calls have a lower price than the written (or short) calls. The investor expects a rise in the price of the underlying asset.
BULL MARKET A market in which the trend is for prices to increase.
BULLION The generic word for gold and silver in bar or ingot form. Originally meant ‘mint’ or ‘melting place’ from the old French word bouillon, which means boiling.
BULL PUT SPREAD The purchase and sale of put options at different exercise prices but with the same expiry date. The puts purchased have a lower exercise price than the puts written. The investor expects the price of the underlying asset to rise.
BUTTERFLY SPREAD The simultaneous purchase of an out-of-the-money strangle and sale of an at-the-money-straddle. The buyer profits if the underlying remains stable and has limited risk in the event of a large move in either direction.
BUY To place an opening trade at the offer price of a spread in anticipation of the underlying market rising, commonly referred to as an "up trade", "taking a long position", or "going long". You can also buy at the offer price to close an existing short position.
BUY SIGNAL In technical analysis, a chart pattern which indicates a key reversal upwards in price and the time to buy.
BY-PRODUCT Material of some economic value produced in a process which is focused on extracting another material. For example palladium is produced as a by-product of platinum mining in South Africa.
C
C & F Cost and freight, whereby the quoted price for physical material includes all costs incurred in shipping the metal to the customer’s location but not including insurance.
CBOT Chicago Board of Trade (CBOT). An exchange where grain, gold, and Treasury Bond futures and options are traded.
CIF Cost, insurance and freight, whereby the quoted price for physical material includes all costs incurred in shipping the metal to the customer’s location including insurance.
CALENDAR SPREAD The simultaneous purchase and sale (or vice versa) of an option of the same strike for different months.
CALL OPTION A contract that gives the holder the right, but not the obligation, to buy metal futures at a set price (the strike price) on a given date.
CARRY The simultaneous purchase and sale of the same tonnage of the same metal for delivery on different dates. See "borrowing" and "lending".
CASH PRICE The current price in the market for cash/spot contracts.
CATALYST Catalysts are substances which through their presence influence (increase) the process rates of chemical reactions and after completion of the reaction are still in an unchanged form. In theory, a catalyst is not consumed.
CATHODE The negative pole in electrolysis.
CEILING A recognised high point in market prices. This may be a point the market does not expect the price to exceed, the highest price achieved before the market declines or a level set by a customer as a maximum price to be paid.
CFTC Commodity Futures Trading Commission, the regulatory body in the US covering futures markets
CLEARING The process of registering and guaranteeing the financial settlement of futures and options transactions and the settling of differences between clearing members.
CLIENT CONTRACT A contract between a broker member and its customer.
CLOSE (OUT) To undertake an opposite position, i.e. if the initial transaction was a purchase, the closing out activity is to sell the same tonnage for the same prompt date."
COMEX The New York Commodity Exchange, now a division of NYMEX, the New York Mercantile Exchange. The contracts in the COMEX gold market consist of 100 ounces each, and the actively traded contracts are the even months of the year.
COMMERCIAL SILVER Silver that is .999 fine (99.9%) or higher, usually sold and shipped in 1000 oz. bars
COMMISSION Fee charged by a broker for executing an order
COMMODITY Raw materials that can be bought and sold.
CONCENTRATING The process of separating milled ore into two streams; one greatly enriched in the valuable mineral (concentrate) and another of waste material (tailings). Concentration is a vital economic step in the production process because it reduces the volume of material which must be transported to and processed in a smelter and refinery.
CONSIGNMENT STOCKS A bullion dealer may hold gold on consignment at a client's premises. It is the dealer's property until the client withdraws it and pays the prevailing price. Alternatively, it may be held by the dealer at local banks until the clients come forward to purchase and take delivery.
CONSUMER'S HEDGE The purchase of futures or options on futures or both as protection against a rise in raw material prices
CONTANGO Market situation when a nearby price is lower than a further forward price.
CONVERTER A furnace in which metal production or refining processes are typically carried out through oxidation.
COPPER CONCENTRATE A product resulting from the processing (enriching) of copper ore
CORNER When one operator owns or controls an excessive amount of stocks enabling them to control the supply of material and in consequence to control the price.
COVER To sell a long position, or buy back a short position."
CROSS TRADE A trade between a broker and its customer, which is not revealed to the rest of the market but for registration purposes it is entered in the matching process by the clearing member as a buy and sell contract to and from itself.
D
DAILY PRICE LIMIT The maximum price, increase/decrease, permitted from the previous day's settlement price.
DAY ORDER An order to buy or sell at a particular price level which is only valid for one business day
DECLARATION DATE The last date on which the holder of an option may advise the grantor of his intention to exercise the option.
DEFERRED SETTLEMENT A situation in which the settlement of a bullion market contract is deferred by mutual agreement on a daily basis.
DELTA The rate of change to the premium of an option as the underlying price changes.
DELTA HEDGING A strategy undertaken by granters of options to protect their exposure. A delta hedge calculation takes into account changes in the spot price, the time to expiry and the difference between the strike and spot prices."
DERIVATIVE The collective term for a future or call or a put option the price of which is derived form the value of the underlying metal.
DISSEMINATED Term applied to ore deposits consisting of fine grains of ore mineral dispersed through the host rock
DIVIDEND A cash bonus or other distribution made by a company to its shareholders and applicable to every share that they hold in relation to that company. Spread bets in relation to individual equities do not qualify for dividends.
DGCX Dubai Gold and Commodities Exchange
DORE A gold-silver alloy, an intermediate product from certain gold mines."
DOUBLE BOTTOM/DOUBLE TOP In technical analysis, a double bottom occurs when the price falls to the same level twice and fails to penetrate. This signals good support. A double top is the opposite, ie, when a price rises to the same level twice and fails to break above it, and therefore produces a level of good resistance."
DOWN TRADE See "sell"
E
EFP Exchange For Physical. Actual exchange between an OTC contract and a futures contract which takes place off exchange between parties.
EUROPEAN-STYLE OPTION An option that can only be exercised on the expiry date
EXCHANGE TRADED OPTIONS Options on future contracts offered by a recognised futures exchange, such as NYMEX.
EXERCISE The initiation of the right to buy (call) or sell (put) an asset by the option holder at the agreed strike price
EXERCISE PRICE (STRIKE) The value of the underlying futures contract determined at the time of purchasing an option. Hence the price achieved if the option is exercised.
F
FABRICATOR A company that processes refined (cathodes, ingots, billet etc) or semi-fabricated (extrusions, sheet metal etc) metal to produce products for sale to end consumers.
FACE VALUE The nominal value given to legal tender coin or currency
FAIR VALUE The theoretical price at which a futures contract would be expected to trade.
FINENESS The proportion of precious metal in an alloy expressed as parts in 1,000; thus 995 or two nines five is 995/1000 or 99.5% pure
FINE WEIGHT The weight of gold contained in a bar, coin or bullion as determined by multiplying the gross weight by the fineness.
FIX The London gold fixing takes place twice daily (10.30 am and 3.00 pm) over the telephone and sets a price at which all known orders to buy and sell gold on a spot basis at the time of the fix can be settled. The fix is widely used as the benchmark for spot transactions throughout the market.
FLAG In technical analysis, one of the basic chart patterns. In a bull market a flag occurs when prices consolidate for a period then continue to rise. In a bear market the converse occurs, ie, prices resume falling after a period of consolidation.
FLAT RATE FORWARDS Forward contracts offering a constant contango throughout the life of the contract.
FLOAT/ FLOTATION The first public offering of a company's shares or securities on a regulated exchange.
FLOOR A recognised low point in market prices. This may be a point the market does not expect the price to fall below, the lowest price achieved before the market rises or a level set by a customer as a minimum selling price.
FOB Free on Board. A FOB price usually includes cost of transport, insurance and loading onto a vessel at the port of departure."
FORWARD PREMIUM The difference between spot and forward quotations which will be determined by money and precious metal interest rates and storage charges
FORWARD TRANSACTION Purchase or sale for delivery and payment at an agreed date in the future
FUNDAMENTAL ANALYSIS The study of basic underlying factors which will affect the supply and demand of the commodity being traded.
FUTURES CONTRACT An agreement to buy or sell a specific commodity or financial instrument on a set date in the future at a set price.
G
GAMMA The sensitivity of an option's delta to changes in the price of the underlying instrument
GAP THROUGH When a market opens or trades through the specified level of a market order without actually trading at the price of the market order.
GOFO Gold Forward Offered Rate. The gold equivalent to LIBOR. The rates at which dealers will lend gold on swap against US dollars.
GOLD LOAN A financing mechanism whereby gold is borrowed from a bullion bank (which has usually borrowed it from a central bank or banks), and sold into the market to raise cash, usually to finance a gold mining operation. The metal is then repaid over an agreed period of time. The interest on the loan is usually paid either in dollars or in gold subject to the agreement between the counter-parties.
GOLD WARRANT 1. A warrant giving the buyer the right to buy gold at a specific price on a specified value date, for which the buyer pays a premium. While similar in structure to options, warrants are securitised instruments."
2. A certificate often issued by exchanges indicating ownership of physical metal.
GOOD DELIVERY BARS Also referred to as large bars, the ingots that conform to London Good Delivery standard
GOOD DELIVERY STANDARD The specification to which a gold bar must conform in order to be acceptable on a certain market or exchange. Good delivery for the London Bullion Market is the internationally accredited good delivery standard.
GRADE The mass of desired metal(s) in a given mass of ore.
GRAIN One of the earliest units of weight for gold. 1 grain = 0.0648 grams or 0.002083 troy ounces. 15.43 grains = 1 gram; 480.6 grains = 1 troy ounce; 24 grains = 1 pennyweight.
GTC (GOOD 'TIL CANCELLED) Applicable to market orders, it signifies that the order will be open and carried forward indefinitely until it is either filled or cancelled by the client.
H
HAIRCUT In computing the value of assets for purposes of capital, segregation, or margin requirements, a percentage reduction from the stated value (e.g., book value or market value) to account for possible declines in value that may occur before assets can be liquidated.
HALLMARK A mark or number of marks made on gold or silver jewellery and other fabricated products to confirm that the quality is of the carat fineness marked on the item.
HEAD AND SHOULDERS A three-peak pattern resembling the head and shoulders outline of a person, which is used to chart stock and commodity price trends. The pattern indicates the reversal of a trend. As prices move down to the right shoulder, a head and shoulders top is formed, meaning that prices should be falling. A reverse head and shoulders pattern has the head formation at the bottom of the chart and means that prices should be rising.
HEDGE A transaction entered into in order to offset the impact of adverse price movements of an asset.
HIGH GRADE The best or richest ore in a deposit.
HOLDER The buyer of an option, more commonly referred to as the taker.
HOUSE ACCOUNT An account designated for the brokers own transactions.
I
IN-THE-MONEY A term used to describe an option contract that is showing a profit.
INGOT A form of metal bar, often a preferred form for delivery. Derived from casting into a simple shape for hot working or remelting.
INITIAL DEPOSIT/MARGIN Funds put up as security for the guarantee of the contract fulfilment at the beginning of a futures or options contract.
INTEGRATED PRODUCER A producer who also owns the smelting and semi-fabricating facilities.
INTEREST YIELD In the context of the LME, interest yield refers to the profit earned by borrowing metal in a contango market, sometimes giving the user a greater return than is available from the current interest rate on money.
INTRINSIC VALUE Refers to options. The difference between the current spot price and the option strike (or exercise) price, ie, the in-the-money element
J
JOINT VENTURE A contractual agreement between two or more parties for the purpose of executing a business undertaking. All parties agree to share in the profits and losses of the enterprise.
K
KARAT Unit of fineness, scaled from one to 24. 24 karat gold (or pure gold) has at least 999 parts pure gold per thousand; 18-karat has 750 parts pure gold and 250 parts alloy, etc.
KEY REVERSAL In technical analysis, a crucial change in price direction, signalling an end to either a bull or bear market.
KERB A trading session when open-outcry transactions occur freely outside of scheduled ring times and when all or some of the LME metals are traded simultaneously.
KILO BAR A popular small gold bar. A one-Kg bar .995 fine = 31.990 troy ounces, and a one-KG bar 9999 fine = 32.148 troy ounces.
KNOCK-IN In options, an exotic option in which the option becomes valid only when a pre-agreed price level (usually different to the strike price) is touched during the lifetime of the option.
KNOCK-OUT An exotic option which is automatically terminated or "knocked out" if the price of the underlying asset reaches a predetermined level (usually different to the strike price) during the lifetime of the option.
L
LBMA The London Bullion Market Association acts as the coordinator for activities conducted on behalf of its members and other participants in the London Bullion Market, and it is the principal point of contact between the market and its regulators.
LCH The London Clearing House
LEACHING The extraction of a soluble metallic compound from ore by dissolving the metals in a solvent.
LENDING One form of carry. In this case the simultaneous selling of metal for a near dated prompt and the buying of that metal for a later dated prompt. In effect the party is lending the metal for the period
LEVERAGE The potential to magnify profits or losses by incurring exposure to large positions from a small investment outlay.
LIBOR London Inter Bank Offer Rate
LIFFE London International Financial Futures Exchange.
LIMIT ORDER An order that has restrictions placed on it. The customer specifies a price and the order can only be executed if the market moves to or betters that price.
LIQUIDITY The market tradability of an asset. A highly liquid market has a large number of buyers and sellers, or lenders, making it easy to enter or exit.
LME London Metal Exchange
LONG A long position means the purchase and retention of an asset
LONG STRADDLE The purchase of call and put options with the same exercise price and expiry date. The investor expects a significant increase in volatility; direction of prices is not of prime importance.
LOOKBACK OPTION A history dependent option where the settlement at maturity is reliant not only on whether the option is in-the-money at expiry, but also on the maximum or minimum price achieved by the underlying asset during at least some part of the option life.
LOT Commonly used word for a standard futures contract.
LSE London Stock Exchange
M
MARGIN Deposit, or collateral, required as security against open positions in futures, forwards or options markets. Also called "Initial Margin" or "Original Margin".
MARGIN CALL Money that is called for from the client during the life of the transaction to cover exposure resulting from an adverse price movement
MARKET ORDER An order given to a dealer for immediate execution, to buy or sell at the best prevailing price. Also known as "At Best" or "At Market".
MATURITY The date when a futures contract that has not been offset by an opposite position must be settled by delivery of physical metal.
MCX Multi Commodity Exchange of India (MCX) which facilitates online trading, clearing and settlement operations for commodity futures markets across the country
MERCHANT A dealer in physical metal who sources stocks and markets for customers but neither produces nor consumes metal for his own use.
MERGER When two companies combine in order to form one entity.
METALLURGY The production of metals from raw materials such as ore concentrates, residues and recycling materials.
MILLING The first stage of mineral processing. Ore pieces from the mine are further mechanically reduced in size to maximise efficiency of the concentration process.
MINING The extraction of economically important minerals and ores from the earth.
MINING FEASIBILITY STUDY An assessment of the economic viability of a potential mining project.
MIN/MAX A zero cost collar-style hedging strategy whereby a client sells one option in exchange for another. In bullion markets, primarily used by producers who grant call options in exchange for put options – in this case, the structure guarantees that the client will receive a minimum pre-determined price in exchange for a possible opportunity loss if the actual price at maturity is above a maximum level, as determined by the strike price of the call option granted.
MOULDS Casting moulds made of copper, graphite, cast iron or steel for casting metal ingots.
MOVING AVERAGE In technical analysis this is a key trend line that is plotted on a bar chart, reflecting the progress or prices over a given period of time.
N
NAKED OPTION The sale of an option by a party who does not hold the underlying asset to back it.
NCDEX National Commodity & Derivatives Exchange Limited (NCDEX) is located in Mumbai and is a professionally managed online multi commodity exchange.
NET CHANGE The difference between the closing price of an instrument on the day's trading and the previous day's closing price. Net change can be positive or negative, and is quoted in terms of currency.
NOISE Normal everyday market movement, up and down without really going anywhere. The ebb and flow of everyday market movement.
NYFE New York Futures Exchange
NYMEX A US futures exchange consisting of two divisions, NYMEX (the New York Mercantile Exchange) and COMEX (the Commodities Exchange).
O
OFFER The price at which a dealer is willing to sell. See also ""Ask"""
OPEN INTEREST On a futures exchange the daily statistic that indicates the number of open contracts, ie, those which have not been fulfilled or closed out.
OPEN OUTCRY A style of trading conducted on a futures exchange in a ring or a pit where dealers face each other, calling out the price, contract, month and number of contracts
OPEN PIT A mine based on extraction from a surface excavation, which remains open to the surface for the life of the mine.
OPEN POSITION A market position which has not been closed out.
OPTION An option is the right but not the obligation to buy and sell a pre-determined quantity of an underlying asset at a pre-determined price by or on a defined date.
ORE Rock from which metal or minerals can be extracted at a financial profit.
ORE MINERA L A mineral which contains a metal or metals which can be extracted at a financial profit.
OTC Over The Counter. Transactions that are quoted and conducted between parties on a principal-to-principal basis as opposd to being traded via a broker on an exchange
OUT OF THE MONEY Refers to options with only time value, i.e., no intrinsic value, e.g., calls where the strike price is greater than the underlying asset price; puts where the strike price is less than the underlying price.
OVERBOUGHT A market in which the price, under excessive buying pressure, has risen too high and too fast without genuine fundamental support to maintain the new level.
OVERSOLD A market which has fallen too far and too fast under excessive selling pressure and is expected to move back to a higher, more neutral level.
P
PANNING The classic and simple method of mining alluvial gold.
PAPER GOLD A term used to describe gold contracts such as loco London deals and futures contracts which do not necessarily involve the delivery of physical gold.
PHYSICAL Trades that result in the delivery of the commodity i.e. not hedging, speculation or arbitrage.
PLATINUM GROUP ELEMENTS/PLATINUM GROUP METALS (PGE/PGM) The six metallic elements platinum, palladium, rhodium, ruthenium, iridium and osmium.
POSITION The net tonnage a party has bought or sold on any given prompt date. Also the overall position, being the net tonnage bought or sold for all prompt dates combined.
PRECIOUS METALS Metals of great value being gold, silver, platinum and other platinum group metals (for information on precious metals visit www.thebulliondesk.com)
PREMIUM A one-off payment, made at the outset, to purchase an option. The premium is a write-off unless the option is traded on either at a profit or when some or all of the premium may be recovered.
PRODUCTION STANDSTILL Regularly recurring production standstill in order that all furnaces and connected plant can be overhauled, maintained and repaired.
PUT OPTION A contract which gives the buyer the right, but not the obligation, to sell a specified amount of an asset at a predetermined price on or before a specified date.
PUT SPREAD An options position comprised of the purchase of a put option at one level and the sale of a put option at some lower level. The premium received by selling one option reduces the cost of buying the other, but participation is limited if the underlying goes down.
R
RESISTANCE LEVEL A level at which a price trend is halted either temporarily or totally. See also "floor" and "ceiling".
REFINING The separating and purifying of gold and silver from other metals
REFINERY A processing plant usually associated with a smelter that produces high purity metal.
RHO Rho is a measure of an option's sensitivity to a change in interest rates; this will impact on both the future price of the option and the time value of the premium. Its impact increases with the maturity of the option.
RING Period of 5 minutes in which a metal is traded at the LME and a settlement quotation is fixed
RISK The exposure to adverse market movements, mischance or the possibility of losing money.
ROASTING Treatment of ore by heat and air, or oxygen enriched air, or other reagent, to eliminate volatile substances and bring about chemical change such as oxidation of sulfides
ROLLED GOLD The process in which a layer of carat gold alloy is mechanically bonded to another metal
ROUND TURN The complete transaction of a closed out futures contract, i.e. both the buying and selling operations. Commission rates are sometimes quoted on a round turn basis.
S
SAMPLING The selection of a small but representative part of an ore body or process material for analysis.
SECONDARY METAL Scrap metal that has been recycled
SELL To place an opening trade at the bid price of a spread in anticipation of the underlying market falling, commonly referred to as a "down trade", "taking a short position", or "going short". You can also sell at the bid price to close an existing long position.
SELL SIGNAL In technical analysis, a chart pattern which indicates a key reversal downwards in price.
SETTLEMENT RISK The risk that arises when payments are not exchanged simultaneouslly, generally arising due to time differences. One party to a transaction must effect payment or delivery in an earlier time zone without having confirmation of the receipt of a reciprocal asset in a later time zone.
SFE Sydney Futures Exchange
SGX Singapore Exchange
SHAFT A vertical or inclined conduit providing access from the surface to underground orebodies.
SHORT A short position means the sale of an asset not yet owned
SHORT COVERING The closure of short positions
SHORT STRADDLE The sale of a call and put option with the same exercise price and expiry date. The investor has a neutral view of the underlying asset and expects limited price fluctuation.
SILVER A lustrous, white, malleable and ductile precious metal, with remarkable electrical and thermal, light-reflecting, bacteria-killing, wear resistant, photosensitive and other qualities.
SIMEX The Singapore International Monetary Exchange was established in 1983 from an alliance between the Gold Exchange of Singapore and the International Money Market (IMM) in Chicago.
SLIMES The fine fraction of waste material discharged from the mill after valuable minerals have been recovered or the metallic compounds left in the bath during electrolytic refining of metals.
SMELTING The process of melting ores or concentrates to separate out gold or silver from impurities.
SOFFEX Swiss Options & Financial Futures Exchange.
SPECULATIVE LONG A trader who has bought a forward or future in the expectation of closing it out at a higher price
SPECULATIVE SHORT A trader who has sold a forward or future in the expectation of buying it back at a lower price.
SPOT PRICE The price for spot delivery which in the gold market is two days from the trade date
SPOT SETTLEMENT Delivery of metal and payment of money, which takes place two business days after the transaction date."
SPOT DEFERRED A forward sale contract with no fixed delivery, but with the facility to roll forward the pricing of a contract at pre-determined intervals on the basis of current interest rates. This gives more flexiblity than conventional forward contracts.
SPREAD The difference between Bid (the price a buyer is prepared to pay for gold) and Ask (the price at which a seller offers to sell) prices.
SQUEEZE Excess demand over supply on a particular prompt date or period that causes the price (s) for that date (period) to rise more sharply than surrounding prices.
STANDARD BAR 1) Gold bar weighing approximately 400 ounces or 12.5 kilograms and having a minimum fineness of 995 parts per 1,000 pure gold.
2) Silver bar weighing approximately 1,000 ounces with a minimum fineness of 999. "
STANDARD DEVIATION Statistical measure of the degree to which an individual value in a probability distribution tends to vary from the mean of the distribution. Indicates probability of a variable or price falling within a certain width or band around the mean.
STOP LOSS ORDER An order to close a position should the market rise above or below a stated level in order to minimise loss.
STOPING Activity of extracting ore underground
STRADDLE Purchase or sale of call and put options for the same underlying asset with the same expiry date and strike price.
STRANGLE In options, a speculative strategy of either buying or selling puts and calls, each with the same expiry date but with different strike prices.
STRIKE PRICE In options, the pre-determined price at which an option may be exercised.
SUPPORT In technical analysis, the price level where new buyers are expected to emerge.
SWAP 1) Simultaneous purchase and sale of spot against forward.
2) An exchange between locations.
3) A swap or exchange of different size or quality of gold bars.
4) An agreement whereby a floating price is exchanged for a fixed price over a specified period.
SWITCH Simultaneous purchase and sale of the same asset for different maturity dates.
SYNTHETIC A strategy of buying a combination of futures and put options to achieve the equivalent position of buying a call option or buying a combination of futures and call options to achieve the equivalent position of buying a put option.
T
TAEL Traditional Chinese unit of weight for gold. 1 tael = 1.20337 troy ounces = 37.4290 grams. The nominal fineness of a Hong Kong tael bar is 990 but in Taiwan 5 and 10 tael bars can be 999.9 fine.
TAILINGS Fine grained remains of ore once most of the valuable material has been removed in the concentration process.
THETA In options, the rate of change in the value of the option with respect to time with all else remaining the same.
TICK The minimum movement of the market in question, also commonly referred to as a “point.” The value of a tick can vary by type or size of bet or trade.
TIME VALUE Refers to options. The difference between an option’s market price and its intrinsic value.
TOCOM The Tokyo Commodity Exchange, established in 1984.
TOLA Traditional Indian unit of weight for gold. One tola = 0.375 troy ounces = 11.6638 grams. The most popular sized bar is 10 tola = 3.75 troy ounces.
TOM/NEXT Refers to the time period commencing one business day forward from the present and ending one business day later (usually spot). In bullion, generally refers to the swap rate for borrowing or lending metal vs. US$ for this time period, which is typically used to manage short-term liquidity flows.
TROY OUNCE The traditional unit of weight used for precious metals which was attributed to a weight used in Troyes, France, in medieval times. One troy ounce is equal to 1.0971428 ounces avoirdupois.
TSE Tokyo Stock Exchange
U
UNALLOCATED ACCOUNT An account where specific bars are not set aside and the customer has a general entitlement to the metal. This is the most convenient, cheapest and most commonly used method of holding metal. The holder is an unsecured creditor.
UNDERLYING The variable on which a futures, option or other derivative contract is based.
UP TRADE See "buy"
V
VANILLA OPTION The date agreed between parties for the settlement of a transaction
VARIATION MARGIN Additional margin, or collateral payable by an investor, resulting from an adverse movement in the price of the underlying asset in a forward, futures or options contract.
VOLATILITY Refers to options. The rate of change in the price of the underlying asset.
VOLUME On futures exchanges, the number of contracts traded in a session
W
WAFER A thin gold bar popular in the Middle East, South East Asia and Japan.
WAREHOUSE RECEIPT A warehouse or depository receipt is issued when delivery is taken on a futures exchange. It specifies the quantity and fineness of gold or silver held.
WHITE GOLD A gold alloy containing whitening agents such as silver, palladium or nickel as wel as other base metals. Often used as a setting for diamond jewellery.
WINDOW OPTION An option whose outcome depends on the performance of the underlying during the life of the option and whether that price lies between certain parameters on a certain observation day or days.
WRITER In options, the seller or granter of the option.
Y
YIELD CURVE The relationship between interest rate yields and maturity lengths. The yield curve normally has a positive slope (ie, upwards) because yields on long-term interest rates usually exceed short-term yields. An investor expects a higher return for holding an asset for a longer time, hence yields normally increase with maturity length.
Z
ZERO-COST OPTION An option strategy under which one option is purchased by simultaneously selling another option of equal value. (see also Min/Max)
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