traderkenny
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The Learn About Futures Insider:
Gold
Gold
Like no other metal on earth, gold has captured the imaginations and emotions of humans across centuries. From jewelry and sculpture, to a store of wealth and symbol of status few other elements could claim the mantle of historic importance like gold can. Traded on many exchanges with both cash and futures contracts, these specifications are for the futures contract from the CME Group.
Contract Size: 100 troy ounces
Price Quote & Tick Size: Dollars and cents per ounce; minimum tick size is ten cents per ounce or $10.00 per contract.
Contract Months: All months
Trading Specs: Open outcry on runs from 8:20 am to 1:30 pm ET. Electronic trading on Globex runs Sunday through Friday 6:00 pm until 5:15 pm with a 45 minute break each day.
Daily Price Limit: As of date of initial publishing, there were no daily limits; however, it is wise to consult exchange.
Trading Symbols: GC or EGC for Globex
Past performance is not indicative of future results.
***chart courtesy of Gecko Software
Gold Facts
Gold is normally combined with other metals as pure gold is too soft to be applied in ways that result in frequent handling. Although gold mining is an important source of world gold, it is also one of the most recycled metals today meaning that the supply and demand dynamics are a little removed from the normal production and consumption cycle.
According to the World Gold Council, in 2008 the supply sources of gold could be broken down as illustrated in the following chart:
*Data courtesy of the World Gold Council
Gold mining can be traced back to early Egyptians around 3500 B.C. and the largest known deposit of the yellow metal is in South Africa. Today, gold mines are operated all across the globe with the most important - or at least the most prominent - in South Africa, the source of 40 percent of modern gold mining, and China.
Important Modern Gold Discoveries:
North Carolian Gold Rush 1803
California Gold Rush 1843
South African Gold Reefs 1886
Kalgoorlie's Golden Mile in Western Australia 1893
Klondike Gold Rush, Yukon, Canada 1896
Serra Pelada, Brazil 1983
The latest estimates and projections from the US Geological Survey provide an illustration of world mine production as follows:
Data courtesy of the USGS
Key Terms
Bullion - Precious metals in bar or coin form. These can be used as a vehicle for physical investment in gold. Bars are usually larger than coins. Many popular coins for investment are produced by the national mint of particular countries.
Good Delivery Bar - An acceptable bar of gold which can be delivered against a contract. The London Bullion Market Association has requirements for their Good Delivery bars which include an approved list of refineries. These are the bars normally used on major markets like government gold reserves and central bank reserves.
Carat; Karat - A term for a measure of fineness for gold which is between one and 24 with 24 being closest to pure gold. Often abbreviated as "k"
Fineness - A term for a precious metal's purity expressed as a portion of 1,000 parts of an alloy. .999 gold has 999 parts gold, one part another metal. Gold is often alloyed with silver or copper, or both.
Key Uses
Gold has been applied to everything from pharmaceuticals to food but continues to be used primarily for ornaments.According to the World Gold Council, identifiable gold demand in 2008 broke down into the following sectors (excluding central banks):
*Data courtesy of the World Gold Council
Key Concerns
Important fundamental factors for gold prices include economic conditions as well as supply conditions.
Economic Reports: Gold can be viewed as a haven for investors due to is historic level of import with regards to wealth. The economic conditions on a global level - as well as market reactions to individual reports in the US - may have an impact on gold price volatility. It is still a commodity and may also move with the movements of world currencies and vice versa.
Regional Concentration & Perceived Scarcity: The state of mining in South Africa, the jewelry demand in Asia, bullion demand, investment concerns - all add up to a pretty important basket of fundamentals.
Applications: Besides jewelry or investment demand, any increase in industrial applications for gold could impact price or volatility.
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