CBOT gold

herbie

Newbie
7 0
I am considering buying futures in mini-gold (YG) on CBOT for delivery month December 2004. Is there any reason why it would be a disadvantage to buy futures with a delivery month that is far away? Altough volume is lower for these months that shouldn't be a problem I would think since the market maker maintains liquidity:
http://www.cbot.com/cbot/www/cont_detail/0,1493,14+62+11211,00.html

The key benefits to trading CBOT's mini-sized Gold and Silver
contracts exclusively on the exchange's electronic trading platform include prompt, efficient trade execution, price transparency and continuous two-sided markets provided by a market maker. Moreover, CBOT metal contracts have proved attractive to market participants because of the clearing guarantee provided by the AAA-rated Board of Trade Clearing
Corporation, a feature not available at other exchanges.

Herbie
 

PeterTT

Member
87 1
Any special reason why you want to use this particular contract/exchange? .. I have always just used spreadbetting firms .. the closest spread I have found is with Finspreads. This is just based around the COMEX 100oz future. Having said that, I do not have direct access to exchange traded futures.

Peter
 

herbie

Newbie
7 0
Margin requirements are relatively low on mini-gold contracts compared to regular COMEX gold contracts. I have not really considered financial spread bets.

Herbie
 

Andreas

Active member
109 0
Herbie,

You might want to check how volume and O.I. is on the CBOT contracts. I remember they are rather thinly traded compared to COMEX.

Best regards,
Andreas
 

illuminato

Newbie
9 0
re: gold trading

You may wanna try a spreadbetting company or if you look for a narrower spread spot gold/or CFD's. E.g. check a company like www.deal4free.com, they offer fairly narrow spreads (.5) and high leverage.

I am sure there are other companies as well offering similar service. Advantage of trading spot gold is ofcourse it's 24 hours.


Good luck
 

bgold

Established member
532 5
In summary, watch out with YG and YI's. Liquidity in mini's is a directly linked to hype in gold. MM's are making bid-offers in nearby contract with view to pick ignorant traders (like ourselves). Bid-Ask is at best $0.6 and often widens to $1+. Note that mm often step out and stops can easily be hit on no volume (i speak out of experience). Beyond nearby contract, Andreas is right, there is no volume and usally no OI. If you ever want to get out Bid-Ask is $lots ($3+ not unusual). YG Z4 has OI of 64 contracts; outside pit trading hours the market is also closed.

I would recommend that if you want to trade gold futures, open a futures account with a broker and trade the proper contract where there is sufficient liquidity or trade nearby month in YG. If you need to rall contracts mm do pick you ciean.

If you just want longer term (leveraged) exposure use SB firms (I have no experience). Note that if leverage is a argument for using futures as opposed to SB, i would seriously reconsider going out a LT contract as ven if your proves right you may be exposed to significant margin calls in the interim.
Good luck
 

illuminato

Newbie
9 0
gold trading

What ever instrument you intend to use, futures, spot gold, CFD's or Spread Bet take the following into consideration;

Spread: Dont accept anything above .5 spread

Commissions: Add these to find out your "real spread"

Real spread > 1 $ --> impossible to day trade

Leverage: Follow your own money management rules and apply this to platform you trade on. e.g. very easy to get margin calls if you use highest possible leverage and position trade (ie holding position for days and sometimes weeks and months.

Liquidity: This is key, you gotta to be able to exit a position 24 hours 5 days a week. If you trade a futures contract that does not allow you 24 hours trading you will undoubtedly experience gap's in both the right and wrong direction, --> could get nasty and painful -- a bit like betting on horses (imo) there fore I would never trade a contract which is not 24 hours/ day

Hope any of this helps and Good Luck
 

bgold

Established member
532 5
Gold correction or something more?

Failed attack on $400.- and all the smart and fast money gets out. Ok, USD is a little stronger, but, hey for how long?

Any thoughts?
 

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josbarr

Active member
214 2
LONDON, Nov 17 (Reuters) - Gold prices should hit a high of $435 an ounce in 2004, supported by increased investment demand, a weaker dollar and geo-political tensions, global investment bank Dresdner Kleinwort Wasserstein said on Monday.

"Investment demand will become increasingly important as slowing producer de-hedging is expected to become a less significant demand factor," Dresdner <ALVG.DE> said in a report.

Hedging is the practice of selling yet-to-be-mined nuggets on forward markets. De-hedging has been cited as the most important factor behind rising gold prices in the past two years.

Gold should average $375, with a low of $325, the company said in its 2004 outlook.

The metal was trying to break through psychological resistance not seen since March 1996 at $400 on Monday on a weakening dollar, which makes the metal cheaper for holders of other currencies, and security fears following bombings in Turkey at the weekend.

Spot gold <XAU=> was trading on Monday at $396.25/395.95, near a fresh 7-1/2 year peak.

The silver price was expected to average $5.02 an ounce in 2004, with a high of $5.50. Spot silver <XAG=> was at $5.38/5.40 on Monday -- around 3-3/4 year highs.

Stricter vehicle emission control regulations, increasing demand due to economic recovery, low stocks and uncertainties about South African production were factors that could push the platinum price to a high of $825 an ounce next year, Dresdner said.
 

bgold

Established member
532 5
If you want a daily dosis with reasoning why Gold is going via $400 , $600 to over $1000 per oz, try http://www.mineweb.com

Excellent source of infop about precious metal sector. Provides ample confirmation for diehard bulls not to lose faith.

This was a story published today:

JOHANNESBURG – Gold is poised for a strong move over $400/oz, as the massive fund interest in the metal pushes for a breach of the key level.
The London trading session hedl its breath for the move today, and spot gold was last at $397.60, edging up after a hard run which saw it trade at $396.70 on Friday, up from $378.95 a week earlier. Gold is now close to levels last seen in February 1996, when it last traded over $400/oz. A move over $400/oz would cap a strong run from $346.70 - the level bullion traded at on January 1 this year.

The euro was last at $1.1827, a symptom of the dollars weakness, and a harbinger of good things to come for gold. “With the euro at these levels I think we’ll see gold go through $400/oz today,” a trader at a major South African bank said. “There are a couple of big players with options to exercise at $400/oz, so I think the market will trade over $400/oz.”

The action in the futures market is also positive for spot gold - December futures traded as high as $399.10 on Friday, signaling the likelihood of a move to $400/oz in the post market. The open interest in gold stands at a record 16 million ounces as funds have built up their interest above the $394/oz.

“The longs have built up a lot over the last week after we hit $394/oz, that has really been our support level,” the trader said.

The trader said gold did not usually breach key levels in the London session, as traders in London traded the metal in a narrow range, waiting for their counterparts in New York and Asia to push the metal over key recistance levels. “I think the real will to push gold through $400/oz lies in New York, that is where the funds with the major interest in gold are based,” he said.

He said the increasingly unstable situation in the Middle East, seen by many as a key driver for gold’s recent run, was in fact an excuse to drive the gold price higher. “The Middle East has been going for some time, Iraq has died in the market. I think the US economy is not looking good, and the rate hikes everyone is waiting for don’t look like they are coming,” the trader said.

But another South African bullion trader said he though the situation in the Middle East was a real cause for concern. “The war on terror is now global, the threat of terrorism is not gone. There are terrorist attacks in Turkey against specific targets, they are going for certain groups,” he said.

The trader said there was a view forming in the market that Iraq may become the US’s new Vietnam, a military quagmire which it may find it hard to exit from. The uncertainty created by the attacks has weighed on the dollar, and fed into the market’s view of gold as a haven, the trader said.

Above $400/oz

Traders said gold faced a host of uncertainties above the crucial $400/oz level, with the possibility of a period of consolidation helping to send it higher, and the threat of fund selling negating its gains.

“If we can get to $400/oz and hold it, we will enter a new stage in the gold market,” the trader said. “There will be some profit taking above the $400/oz level, but if we can hold on above that for long enough, we could see gold go to $410/oz or even $420/oz.”

The trader said that if funds bailed out of gold, the extent of the selling could be disastrous. “There are gold investors who have options below $350/oz – that gives you some indication of the damage fund selling could do to the gold price,” he said.

The most likely scenario, the trader said, is for gold to sink back to levels around $390/oz or just under that level.
 

PeterTT

Member
87 1
Hi

I have taken profit on my Dec Gold spreadbet longs today at 392 .. I have also taken profit on my Long NEM (unhedged gold share in th US) spreadbet.
If you look at a candlestick Gold chart of the last year you see that everytime it accelerates away from the 50 day moving average (as it has this month) and then has a large downward dynamic (like today) then it corrects back to the 50 day moving average (slightly through it even), and sometimes even hits the 200 day moving average. I will start buying again if it hits 380 and will buy down to 370 and then just wait again. I am not shorting Gold as I will not bet against the strong long term uptrend (and the strong Fundamental case). If it went through 400 I might be tempted to buy back in to see if it runs upto 420 quickly but really would not buy much.

Good Luck

Peter
 

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