gold investment, silver investment

Precious metals investment terms A to Z


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.

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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.

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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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Black Swan Event

A black swan event is a very surprising and rare event that is beyond the realm of normal expectations. Such an event is very hard to predict, since it is an outlier in the data series and nothing in the past points to the possibility of its occurrence. However, the event has an extreme impact. In other words, a black swan event is an unexpected event of large magnitude – the bankruptcy of Lehman Brothers in 2008 serves as a good example.

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Bond Yields

A bond yield is a return on investment, expressed as a percentage, for a bond. Investors often analyze the Treasury yields, i.e. the returns on the U.S. government’s debt obligations. The price of bonds is negatively related to the yields they offer. Since there is a negative relationship between gold and the interest rates, there should be positive correlation between the price of gold and bond prices. In other words, there may be a positive relationship between gold and bonds due to the opportunity costs and capital flow from bonds to gold, when prices of bonds become too high (yields become too low). There may also be capital flows in the opposite direction (from gold to bonds) when bond yields increase (bond prices decrease) and provide a better alternative than gold.

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Bretton Woods Agreement

The Bretton Woods Agreement emerged from an economic conference held in Bretton Woods, New Hampshire in the United States, during the first three weeks of July 1944.

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BRIC is the acronym for Brazil, Russia, India, and China. The term was specifically coined to refer to these fast-growing emerging economies and by implication, their mutual benefits by forming alliances with each other.

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Bull market

A bull market is characterized by optimism, investor confidence and expectations that prices will tend to go up. During a bull market in stocks prices are expected to rise even after severe declines. In the precious metals market, however, the situation is quite different. Bear markets can last for a long time and there is no confidence that serious slumps will be followed by periods of recovery.

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Bullion is the general name for pure gold or silver (at least 99.5%) which have been transformed into bars or minted into coins for investment purposes.

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Bullish Divergence

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

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Buoyant Market

In commodity space, buoyant market is generally coined with a market where prices rise with ease when there are sufficient signals of strength

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Business cycle

The business cycle is the regular occurrence of booms and busts. The economy does not grow evenly and continuously. Instead, there are periodic upward and downward movements of general business activity. There are expansions and contractions.Technically speaking, the business cycle is often defined as cyclical ups and downs of Gross Domestic Product (GDP) around its long-term growth trend. There are many theories why the economy develops cyclically, one of them is the Austrian business cycle theory.

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