gold investment, silver investment

Precious metals investment terms A to Z

Accredited Investor

Some kinds of investments are restricted to "accredited investors". See what it means and if you meet "accredited investor" requirements.

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Alan Greenspan

Alan Greenspan was born in 1926 in New York City. He received his Ph.D. in economics from New York University in 1977. Before his career at the Fed, Greenspan worked both in private and public sector. In particular, he run Townsend-Greenspan & Co., Inc., a consulting company. He also worked as an adviser for Richard Nixon’s 1968 presidential election campaign and was a Chairman of the Council of Economic Advisers under President Gerald Ford.

In 1987, President Ronald Reagan nominated Greenspan as a successor to Paul Volcker as the Fed Chair. He took office on August the 11th, 1987 and remained in that role until January 31st, 2006, when Ben Bernanke succeeded him. He served five terms through the administrations of four America’s presidents. It was the second-longest tenure in the position (behind William McChesney Martin).

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Algorithmic trading

Algorithmic trading, used mostly by institutional investors and large hedge funds, utilizes advanced mathematical tools developed by traders to forecast the most probable moves in the markets, and to initiate trades.

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Analyst is an individual whose primary function is a deep examination of a specific subject. Gold analysts study factors influencing the price of gold by various methods and try to predict future moves. Naturally, the best gold analysts are more accurate than other.

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Asian financial crisis

The Asian financial crisis in the late 1990s with devaluation of local currencies caused unexpected havoc in global markets, with a domino effect, including a crisis in Russia, declines in stock markets around the world, and the fall and bailout of the U.S. hedge fund Long Term Capital Management (LTCM).

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Asset swap

Asset swaps are seen to be both cash market instruments and credit derivatives in the financial markets. They are similar in structure to plain vanilla swaps and the difference between the two instruments is in the underlying swap contract. Plain vanilla swaps exchange fixed and floating interest rate products whereas asset swaps exchange fixed rate investments such as bonds which pay a guaranteed coupon rate with floating rate investments such as an index. Asset swaps are used to alter the cash flow profile of a bond.

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Austrian School

The Austrian School is one of the schools of economic thought. Due to its methodological individualism, it is situated in opposition to the mainstream economics, which is based on large aggregates and mathematical models. The Austrian school was founded in 1871 with the publication of Carl Menger’s Principles of Economics, developing the marginalist revolution in economic analysis. Since it early representatives lived in Vienna, the term ‘Austrian School’ was coined, but its influence spreads across the world.

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Authorized Participant (AP)

An Authorized Participant (AP) is usually a large financial institution, like a market maker, which is responsible for obtaining the underlying assets necessary to create and run an ETF. In short, in the case of gold ETFs, it buys gold and delivers it to the ETF provider. In turn, it gets a block of equally-valued (based on NAV) ETF shares, called a ‘creation unit’. The AP may resell these shares for profit. It may also redeem creation units to get the bullion back (only APs can create or redeem ETF’ shares, retail investors can only resell them in the market).

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Backwardation is a phenomenon seen in the futures market, which futures traders need to monitor. A forward curve is said to be in backwardation when futures are traded at a discount in comparison with spot. Gold backwardation means that traders could potentially gain capital (versus simply buying gold right away) when holding gold futures until the contract expires.

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Balance Of Payments

The Balance Of Payments is a government produced financial measure relating to a period of time which accounts in financial terms for the difference between the value of all the country’s imports and its exports. It is an important measure of a country’s relative performance in the global economy.

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Bank of Japan (BoJ)

The Bank of Japan, based in Tokyo, is the central bank of Japan. It ensures the smooth settlement of funds among banks and other financial institutions and issues banknotes. The BOJ also carries out currency and monetary control, which is aimed at achieving price stability (understood as a 2 percent year-on-year rate of change of the consumer price index), thereby contributing to the sound development of the national economy. The BOJ’s highest decision-making body is the Policy Board.

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Bear market

A bear market refers to a decline in prices, usually for an extended period, in a single security or asset, group of securities or the securities market as a whole. Its opposite is a bull market where prices are rising. In case of precious metals, the great gold bear market started in 1980 after the major, long-term top.

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Bearish Divergence

A bearish divergence between the price and a technical indicator is a moderately useful tool for detecting a coming reversal in the bullish trend. Bearish divergence in gold is therefore a moderately bearish signal for the gold market.

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Ben Bernanke

Ben Bernanke was born on December the 13th, 1953 in Augusta, Georgia. He received his Ph.D. in economics from MIT in 1979. He worked in academia for many years, but later started his public service. In 2002-2005, he was a member of the Board of Governors of the Fed. In 2005-2006, he was a chairman of President George W. Bush’s Council of Economic Advisers. In February 2006, he became the Fed Chair, after being nominated by President Bush. During his tenure, Bernanke was responsible for the Fed’s response to the 2007-2008 financial crisis and the subsequent Great Recession. He was later nominated by President Obama for a second term from 2010 to 2014 when Janet Yellen succeeded him as the Fed Chair.

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Bid-ask spread

The bid-ask spread is the difference between the price quoted by investors who want to sell a certain stock or asset (ask price) and those who wish to buy it (bid price). The higher the spread the less liquidity in the market for the asset.

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tops prediction corrections in gold

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