Explaining Gold Options - Options Trading

Explaining Gold Options - Options Trading
Gold Prices 2014: Do What Goldman Does, Not What It Says :: The ...
Help needed - looking for a chart showing gold prices over the past ...
Gold Price Analysis- April 16, 2014 - DailyForex.com

Posted: 15 Apr 2014 11:07 AM PDT

Gold Options Trading

Gold options allow investors to buy or sell gold bullion at a future date (date of delivery) at a set price. The quantity of gold, date of delivery, and price are all preset. As the name implies, trading gold with options is merely an option, not a requirement, so investors are not obliged to either buy or sell gold at the end of a contract.
Options shouldn't be confused with futures contract. While options and futures work the same way (both having a pre-determined price and expiration), the futures contract is an obligation and therefore should be upheld. The difference between gold options and gold futures will be further explained below.

Gold Option Exchanges
Investors who wish to deal in gold options can purchase contracts at the New York Mercantile Exchange (NYMEX) and Tokyo Commodity Exchange (TOCOM). NYMEX gold options are traded per 100 troy ounces of gold, while TOCOM gold options are traded per 1000 grams of gold. These numbers are the minimum purchase requirements before a contract can be made and cannot be lowered due to any circumstances.

Call and Put Options
With gold options, investors can partake in two different trading classes called c alls and puts. It's technically just buying and selling. Calls are made by investors who think that gold prices will be bullish in the future. On the other hand, puts are made when gold investors predict that gold prices will be bearish. Having good fundamental and technical analysis skills are necessary in order to make a decent call and put decisions. Technical analysis is examining patterns on price charts in order to make a good inference on gold's price movements. For closer inspection on this, refer to Bullion Vault's live price graph to see today's gold price patterns. However, fundamental analysis is aided by being up-to-date with the news and current events that can affect the price movements of gold.

Gold Options vs. Gold Futures
Apart from the option/obligation explanation, there are other things that differentiate gold options from options. Here are some of them:

Minimal losses
Investment losses in futures trading can be felt immediately due to their margin requirements. It's also possible for traders to lose more money than they intended because of this. Although, options buyers know exactly what they're getting. Before investing with options, they know how much they're getting in the end and their maximum possible loss.

Leverage Benefits
It's easier to gain leverage in options because the premium payable in it is much lower than the minimum required from investors to deal in underlying gold futures. Having leverage may induce reduced profits but at least it won't be as big as when having borrowed funds in futures.

Gold Prices 2014: Do What Goldman Does, Not What It Says :: The ...

Posted: 16 Apr 2014 10:01 AM PDT

Commodities / Gold and Silver 2014 Apr 16, 2014 - 03:01 PM GMT

By: Money_Morning

David Zeiler writes: Goldman Sachs (NYSE: GS) must really want to buy more gold; this week it repeated yet again its forecast for gold prices in 2014 to drop to $1,050 an ounce.

That might sound contradictory at first, but not when it comes to Goldman.

Jeffrey Currie, the investment bank's head of commodities research, has repeated his $1,050 target several times since last October, when he declared gold a "slam-dunk sell" along with other precious metals.

But investors need to be very skeptical when looking at Goldman's forecasts for gold prices. Not only are they often wrong, but the bank frequently does the opposite of what it recommends.

That Goldman has seen fit to repeat its $1,050 so frequently over the past six months smacks of frustration.

While gold prices did briefly slip below $1,200 in December, the yellow metal is up about 17% since then. Gold prices were trading at about $1,327 on Monday afternoon - hardly the tumble Currie predicted last fall.

Last month, as gold prices were touching their high of $1,382, Currie took the opportunity to remind the world that Goldman was still bearish.

"It would require a significant, sustained slowdown in U.S. growth for us to revisit our expectation for lower U.S. gold prices over the next two years," Currie wrote in a research note.

Money Morning Resource Specialist Peter Krauth disagrees. From where he sits, the gold selloff pretty much exhausted itself in January.

"The largest physical gold ETF, the SPDR Gold Trust (NYSE ARCA: GLD), sold off 42% of its metal between its record high in Dec. 2012 and Jan. 2014, or 564 tons of gold. That selling looks to have bottomed in mid-January and GLD holdings have started to grow again since then - a major trend reversal," Krauth said.

While gold prices may not get back to $1,900 an ounce, neither are they likely to slump down to $1,000. Even if gold prices do slip back below $1,200, demand from central banks as well as Asia is likely to keep them from slipping to $1,100 or lower.

So why is Goldman so insistent that gold prices are going to drop all the way to $1,050, and why should investors view the bank's forecasts with caution?

To answer that, we need to look at Goldman's track record...

Goldman and Gold Prices: A Shady History

Let's first look at some of Goldman's gold price forecasts over the past few years and how they panned out.

For example, back in 2007, Goldman was bearish on gold, telling its clients to sell. In fact, Goldman declared selling gold in 2008 one of its Top 10 tips of the year.

Of course, gold prices rose 12.2% in 2008 and another 23.4% in 2009.

By November 2011, Goldman was actually bullish on gold prices - it raised its target to $1,930 an ounce about one month after gold prices had peaked.

By May 2012, with gold prices below $1,600, Goldman adjusted its bullish target to $1,840 an ounce. Gold prices did rise slightly after that, but never made it to $1,800, and thereafter started a precipitous decline.

By December 2012 - when gold prices were trading in the neighborhood of $1,700, Goldman revised its forecast to $1,800. Six months later gold prices were slipping toward $1,200.

Goldman finally reversed course in February 2013, beginning its string of bearish forecasts that have continued to the present.

That's actually good news for gold prices, as Goldman always seems to be late figuring out where gold is headed.

Or is it?

Does Goldman Manipulate Gold Prices?

It doesn't quite make sense that a top-shelf investment bank like Goldman Sachs would be wrong so often about the direction of gold prices.

But when you look at Goldman's own gold investing habits, a suspicious pattern emerges.

Goldman is usually buying while it publicly advocates others to sell, and vice versa. It knows many investors will follow its "advice," which in turn helps Goldman to buy gold at lower prices and sell gold at higher prices.

Sure enough, as Goldman was declaring gold a sell last year, it was scooping up the yellow metal like crazy. In the second quarter alone it bought 3.7 million shares of the GLD ETF - valued at about $500 million.

If you've ever suspected gold prices are being manipulated, you're not alone - and you're right, they are," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "Bigger firms like JPMorgan, Goldman Sachs, PIMCO, or any of a dozen other behemoths simply release a 'research report' that is interpreted as gospel by the mainstream media and swallowed hook, line, and sinker by millions of unsuspecting investors as a reason to buy or sell."

Knowing this is going on is vital for retail investors, not just so they don't get snookered by the Wall Street heavyweights, but so they can adjust their own strategy accordingly.

Fitz-Gerald said dollar-cost averaging - buying a set dollar amount of an investment at regular intervals - is one tool people can use to avoid becoming a Wall Street patsy.

"Dollar-cost averaging forces you to buy more when the price is low and less when the price is high," Fitz-Gerald said. "Maybe you can't compete with the big banks, but you can beat them at their own game."

Do you believe the reports on precious metals and stocks issued by the Big Banks are valid or simply tools to manipulate the markets? Tell us on Twitter ;@moneymorning or Facebook.

Source : http://moneymorning.com/2014/04/14/gold-prices-2014-do-what-goldman-does-not-what-it-says/

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Help needed - looking for a chart showing gold prices over the past ...

Posted: 01 Apr 2014 01:46 PM PDT

I sometimes check goldprice.org. Or CNBC.com.if I'm on that site. Wish I sold some more of those unwanted gold chains etc when gold was at $1800. Oh well.

Never mind, you already got what you needed.

Signed,
Someone that has two sets of old silver that I still have in my closet. I was given a price of $1000 for one set, but silver was much higher than. Another, oh well.

Gold Price Analysis- April 16, 2014 - DailyForex.com

Posted: 16 Apr 2014 12:13 AM PDT

Start Trading Gold Now!

By: DailyForex.com

The XAU/USD pair fell to its lowest level in five days after breaking below the 1312 support level triggered a sell-off. The XAU/USD pair traded as low as $1286.05 an ounce, which happens to be the 50% retracement level based on the bullish run from 1182.35 to 1392.04. Although gold recovered some of earlier losses at the end of the day, the bulls seem pretty weak at the moment.

Yesterday, data from the world's largest economy were mixed. Consumer price index was stronger than expected but Federal Reserve Bank of New York's regional manufacturing survey came out well below expectations (1.3 vs. 5.6 prior). The XAU/USD pair has been trading in a relatively tight range during today's Asian session as investors are awaiting the release of the Chinese GDP report.

From a purely technical standpoint, the pair will remain bearish in the near future unless it climbs above the 1312 level. I believe this level is a strategic point for the bulls to conquer, if they are going to stop the bears' advance. Only a close above the 1312 level could ease the bearish pressure and give the bulls a chance to march towards 1316 (or even 1323.50).

Currently, the XAU/USD pair is hovering just above the Ichimoku cloud on the 4-hour chart but yesterday's decline brought the market back inside the cloud on the daily chart. If prices resume the bearish tone, I think the first stop will be the 1296/3 area where the bottom of the cloud resides (4-hour chart). A drop below this support would place control back in the paws of the bears as we head towards the 1286 support level.

Explaining Gold Options - Options Trading

Explaining <b>Gold</b> Options - Options Trading

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