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  • Mon. Dec 5th, 2022

Golden channel

Gold Information Pay attention to the price of gold

how to short gold插图

You can do so byselling (shorting) one or more gold futures contracts at a futures exchange. Example: Short Gold Futures Trade You decide to go short one near-month NYMEX Gold Futures contract at the price of USD 851.00/oz. Since each Gold futures contract represents 100 troy ounces of gold,the value of the contract is USD 85,100.

How to short gold futures?

You can do so by selling (shorting) one or more gold futures contracts at a futures exchange. You decide to go short one near-month NYMEX Gold Futures contract at the price of USD 851.00/oz.

How much does it cost to short gold?

Since each Gold futures contract represents 100 troy ounces of gold, the value of the contract is USD 85,100. To enter the short futures position, you have to put up an initial margin of USD 4,302. A week later, the price of gold falls and correspondingly, the price of NYMEX Gold futures drops to USD 765.90 per troy ounce.

What does going short on gold mean?

Going short may also refer to buying a derivative, where the investor profits from the fall in price of the underlying asset such as gold. Naked short means selling short a security or some other asset like gold without having the asset. For instance, if you sell futures contracts for silver buy you don’t have silver to back up the position.

What are the risks of shorting gold?

There is no limit to the losses that can be incurred while selling gold short (the price can theoretically rise infinitely), but the potential gain is limited (the price of gold or stock can fall to zero at the most).

What is ZSL fund?

This fund seeks to deliver twice (2x or 200%) the inverse (or opposite) return of the daily performance of silver bullion in U.S. dollars; the silver price is fixed for delivery in London. ZSL makes a profit when the silver market declines and is suitable for hedging purposes against the fall of silver prices .

What is Zacks research?

Zacks. Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank.

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Is Europe still facing deflationary threats?

Europe is still facing deflationary threats and we are seeing an increasing appetite for equities over commodities backed by the easy money received from the ECB’s QE stimulus. All these factors suggest a bearish trend for gold and silver at least for the short term.

Is the P recious metals more precious?

P recious metals look no more precious now as prices are falling fast since the greenback gained strength, global growth became stubbornly weak and worldwide muted inflation sapped the demand of these metals. Possibilities of a Fed lift-off in December took the U.S. dollar to a seven-month high level tempering the appeal of non interest bearing precious metals across the board (read: ETFs & Stocks to Add on Solid Jobs Data ).

Is silver a high exposure?

This is especially true with silver as it has a high exposure in industrial activity . The U.S. economy is decently improving but China, which is considered the biggest industrial fabricator after the U.S., is seeing lackluster manufacturing activities.

What is a naked short?

Naked short means selling short a security or some other asset like gold without having the asset. For instance, if you sell futures contracts for silver buy you don’t have silver to back up the position. If you had that silver, your losses on the futures contract would be offset by gains on the physical metal. Therefore, this position would be called a hedged (or covered) short futures position. However, if you would sell a futures contract for silver without having silver in the first place, then this position would be purely speculative and since this contract would not be backed by any asset, the position would be called “naked”.

What happens when you short gold?

The gold short seller profits if the price of the borrowed gold or security goes down – in this situation the investor is able to buy it (gold or other security) back at a lower price. The investor incurs losses if gold’s or this other security’s price goes up – the investor has to spend a bigger amount of money for the buyback. There is no limit to the losses that can be incurred while selling gold short (the price can theoretically rise infinitely), but the potential gain is limited (the price of gold or stock can fall to zero at the most). Going short may also refer to buying a derivative, where the investor profits from the fall in price of the underlying asset such as gold.

What is short selling?

It’s the practice of selling borrowed (from the broker) assets, with the aim to buy them back later and return to the lender. Short sellers assume that they will be able to buy the stock back at a lower price than they sold short and thus profit.

How to go short on an option?

A very convenient way of going short is by buying a put option, as it limits the short’s potential loss. It is a contract between two parties to exchange some specified asset at a specified price by (in the case of an American option) or on (in the case of a European option) a specified date. The buyer of the put option has the right, but not the obligation, to sell the asset at this specified price and the seller has to buy this asset, if the buyer sells it. If the spot price at the specified future date is significantly lower than the strike of the option, buyers of the options make a profit – they have the right to sell the asset at a price higher than the market price.

What does "cover" mean in brokerage?

That is why brokers sometimes decide to cover, which means end, the position if the price of the stock rises too much.

What does it mean when a short seller makes money?

Same as always – making money. The short seller anticipates a decline in the price of the security he sold short. If he is able to buy it back at a lower price than he sold it, then he made profit.

When was short selling invented?

Legend has it that the practice of short selling was invented at the beginning of 17th century by Dutch merchant Isaac Le Maire. It has been a source of controversy and criticism ever since. Shorting East India Company stocks in the 18th century by the London-based banking house Neal, James, Fordyce and Down led to a major crisis, resulting in the collapse of the vast majority of private banks in Scotland and a huge liquidity crisis. Short selling is also responsible for magnifying the Dutch Tulip Crisis.

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Is leverage a double edged weapon?

Leverage is a double edged weapon. The above examples only depict positive scenarios whereby the market is favorable towards you. If the market turn against you, you will be required to top up your account to meet the margin requirements in order for your futures position to remain open.