Precious metals investment terms A to Z

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Call Options

A derivative that provides you with leverage during rallies, while limiting your risk. Gold call options, for example, can magnify gains on the long position in gold. The catch is that you have to be right on time.

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Calling the bottom

The phrase „calling the bottom“ is another way of saying that a bottom is in (according to the one calling it) and that higher prices will be seen going forward. For instance, calling the bottom in gold, means saying that the bottom in gold is in.

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Calling the top

The phrase „calling the top“ is another way of saying that a top is in (according to the one calling it) and that lower prices will be seen going forward. For instance, calling the top in gold means saying that the top in gold is in.

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Carry Trade

For traders, carry trade can yield profits even if the prices do not move for a period of time, but rather stay the same.

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CBOT (Chicago Board of Trade)

Chicago Board of Trade, established in 1848, is a commodity exchange and a designated contract market that offers traditional commodity and other financial instruments to traders, subject to the exchange rules and regulations.

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Central Bank Gold Agreement

The Central Bank Gold Agreement (CBGA), called also the Washington Agreement on Gold, is an accord regulating official gold sales. The original version of the agreement was signed on September 26, 1999 in Washington, D.C. Under the agreement, the European Central Bank, the Swiss National Bank and 13 other European national central banks committed to limit sales to 2,000 tons over five years (400 tons per year).

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Centralized Markets

Centralized market is a specific type of a financial market. All markets are places where buyers and sellers meet to exchange goods, products and services. For instance, London Metal Exchange is a centralized market for gold.

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Ceteris Paribus

Ceteris paribus is a Latin phrase meaning “other things being equal or held constant”, which is used to simplify the reasoning. It is commonly used in economics, since economic examples typically involve the interaction of many variables, such as supply and demand. For instance, an increase in value of the U.S. dollar will tend to decrease the price of gold. However, it is necessary to assume “all other things being constant,” since if real interest rates suddenly plunge to negative levels (or risk aversion significantly rises), the generalization about the dollar might not hold and the price of gold may actually rise (although the rise would be higher, absent the U.S. dollar appreciation).

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CFD

A Contract for Difference (CFD) is a contract between two parties who speculate on the future price of some asset. These two parties are called “buyer” and “seller” – the buyer will pay to the seller the difference between the current price of the asset and its value at the time he entered the contract (if this difference is negative, the seller will pay the buyer). For instance if someone is bullish on gold, they can buy a gold CFD and if they are bearish then can sell a gold CFD.

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CFTC (Commodity Futures Trading Commission)

The U.S. Commodity Futures Trading Commission (CFTC), based in Washington, D.C., is an independent U.S. federal agency created in 1974 that regulates futures markets (like Comex), as well as option and swap markets.

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China and Gold

A new global power. The world’s most populous country. One of the world’s fastest-growing economy, with the largest GDP measured by purchasing power parity. The world’s largest exporter and second-largest importer of goods. China. What are its links with the gold market?

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Clearing

In the worlds of finance and banking the activity of clearing encompasses all activities from the time an initial commitment to complete a transaction is made until that transaction is finally settled

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Clearing Price

Clearing prices exist in all types of markets and for all types or product or service. The clearing price for gold (we're using gold as an example here, but the term can be used for assets in the broadest terms, including goods, services and investment products) is the price at which gold can be sold and the market can be said to be "cleared".

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CME Group Inc.

CME Group Inc. is an American holding company and the parent of CME, CBOT and Nymex. It is the world’s leading and most diverse derivatives marketplace with exchanges that offer the widest range of global benchmark products across all major asset classes, including derivatives based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals and weather, as well as clearing services for exchange traded and over-the-counter products. In the following part of the definition you'll learn more about gold and CME.

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Collateral

Collateral is an asset pledged by a borrower to secure a loan. The lender can seize the collateral in the event of a default of the borrower. An example of collateral is a house bought with a mortgage. The use of collateral lowers the risk associated with the loan. This is why loans secured by collateral typically have lower interest rates than unsecured loans.

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