Spot Precious Metals traded at JMI: Gold and Silver
Nations around the world embraced gold and silver as a store of wealth and a medium of international exchange. Individuals have sought to possess precious metals as insurance against the day-to-day uncertainties of paper money. Gold, silver, platinum and palladium constitute the majority of trading in precious metals.
Trading in precious metal futures market or spot market in a speculative manner provides an important alternative to traditional means of investing in precious metals such as gold bullion, coins, and mining stocks, and where substantial profits, as well as losses can be made. Trading contracts in precious metals also provide valuable trading tools for commercial producers and the users of these metals.
Precious metals are traded on the futures and spot markets in contracts (a contract of gold is 100oz while a contract of silver is 5000oz). On the spot market, precious metals are usually bought or sold based on a value date of 48 hours which can be rolled over on a daily basis thereafter. Trading on the futures market is done by buying or selling precious metal for a specific settlement date in the future. For example July Gold, can be bought in March for July settlement.
Trade with JMI Brokers now the most traded, liquid and easily understood precious metals products on earth: Gold and Silver.
We offer our clients very tight spread on spot gold and silver with uninterrupted live pricing on our platform JMI Brokers Trading as well as trading precious metals futures with market spreads.
Benefits of trading with Precious Metals:
Precious metals have been a solid hedge against a declining U.S. dollar
Precious metals have been a proven safe-haven in times of war, political strife and uncertainty
Precious metals can offer outstanding price appreciation and profit potential
Future (OTC) Precious Metals traded at JMI: Gold and Silver
The principle of buying and selling for future delivery has characterized the markets for over a century and a half in physical commodities, mainly metals and staple foodstuffs. It has also been the feature of the foreign exchange markets, where prices can be agreed today for foreign currencies and other financial instruments that can be delivered in the future.
Futures Markets are markets in which participants can fix the price they will pay or receive for bonds, shares and currencies and other financial products, in the future (effectively the parties thus "lock into" a known exchange rate/price).
Trading is made by buying or selling futures contracts which are standardized according to the quality, quantity, delivery time and location for each instrument. A futures contract is specified with the month during which the delivery or settlement is to occur i.e. if the product is gold and delivery is in July then the price quoted is for July Gold.
There are three types of participants in futures markets, the one that wants physical delivery, the hedger who wishes to protect himself/herself against adverse movements in prices and the speculative investor.
The speculative investor has no intention of making or taking delivery of the commodity but, rather, seeks to profit from a change in the price. Investors buy a product when they anticipate rising prices i.e. entering long (and sell that product later, at the higher price), or sell a product when they anticipate declining prices i.e. entering short (and then buy that product later, at the lower price).
If you speculate in futures contracts and the price moves in the direction you anticipated, then you will be making profit. Conversely, if prices move in the opposite direction then losses are made. Speculators therefore are individuals and corporations who seek to profit from anticipated increases or decreases in futures prices.
For those individuals who fully understand and can afford the risks that are involved, the allocation of some portion of their capital to futures trading can provide a means of achieving greater diversification and a potentially higher overall rate of return on their investments.
If each contract consists of 100 oz (the value of the gold contract) then we must multiple 19.6 by 100, the profit therefore will be 19.6 * 100 = 1960 $ per contract Gross profit: (1960 * 4 lots = 7840 $)
A client believes that Gold price against US Dollar is going to rise in the future. To exploit the situation the client intends to buy GOLD (XAUUSD).
Spot gold quoted 760.20 /760.90; the client buys 4 lots at 760.90. This required a total margin of 4000 $ (margin of each lot is 1000 $).
As expected spot gold price rises to 780.50/780.20; the client decides to sell these 4 lots (close his positions). So he sells 4 lots at 780.50.
It's obvious that client has made a profit; to calculate it we should do the following:
*Commission charges are NOT included in the above calculations
If each contract consists of 5000 oz (the value of the silver contract) then we must multiple 0.09 by 5000, the profit therefore will be 0.09 *5000= 450 $ per contract.
Gross Profit: (450*6lots = 2700 $)
A client believes that silver prices is going to fall in the future, silver future price is quoted 13.14/13.155. The client sells 6 lots at 13.14. This required a total margin of 6000 $ (margin for each lot is 1000 $).
The silver didn't move in the client's favor and its price now is 13.22/13.23, the clients decides to buy 6 lots of silver future contract (close his positions), so he buys 6 lots at 13.23. To calculate the loss of the client we should do the following:
*Commission charges are NOT included in the above calculations.