gold investment, silver investment

Precious metals investment terms A to Z

Natural Interest Rate

Natural interest rates often equal to the neutral interest rate in many investors’ minds, but this is a mistake as they are important differences between the two. The latter is treated as the real interest rates that is consistent with output reaching its potential and stable inflation, while the former is an interest rate that reflects the time preference of market participants and allocates resources among the temporally defined stages of production. In other words, it is an equilibrating interest rate consistent with intertemporal consumption preferences and production plans.

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NAV (Net Asset Value)

Net Asset Value (NAV) is the value of an entity’s assets minus the value of its liabilities. It is most commonly used in reference to mutual funds or exchange traded funds (ETFs) and calculated on a per-share basis. ETFs calculate the NAV at 4 p.m. EST, after the markets have closed.

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Negative Yields

Many years ago, Walter Bagehot noted that “John Bull can stand many things, but he cannot stand two per cent.” Well, since the Great Recession, he has had to stand yields well below that. Actually, in many countries, investors have to stand interest rates below zero. How logical is that?

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Neutral Interest Rate

The key concept in modern central banking. And its fatal flaw. The neutral rate of interest, often depicted as r-star (r*). In  the mainstream macroeconomic modeling, the neutral interest rate is treated as the real interest rates that is consistent with output equaling potential and stable inflation.

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Newmont Mining Corporation

Newmont Mining Corporation (ticker symbol: NEM) is a U.S. based gold mining company, one of the largest gold producers in the world. It is the only gold sector company represented in the Standard & Poor’s 500 Index.

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Nikkei 225

The Nikkei 225, also called the Nikkei Stock Average or simply the Nikkei, is a stock index of 225 blue-chip companies traded on the Tokyo Stock Exchange. The index has been calculated since September 1950, retroactive to May 1949, by the Nikkei, officially called The Nihon Keizai Shinbun, the world’s largest financial newspaper. The Nikkei, which is the oldest stock index in Asia, is the headline index and the primary gauge of the Tokyo stock market. It may be described as the Japanese equivalent of the U.S. Dow Jones.

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NIRP (Negative Interest-Rate Policy)

A negative interest-rate policy (NIRP) is a monetary policy maintaining nominal short-term interest rates below zero. The global financial crisis that began in 2007 prompted major central banks to take unconventional policy measures. One of them was the reduction of short-term interest rates to about zero. However, as ZIRP was found to be ineffective, some central banks introduced NIRP. By January 2016, negative interest rates were set by the Bank of Japan, the Central Bank of Denmark, the European Central Bank (see the chart below), the Swedish Riksbank and the Swiss National Bank.

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Non-Commercial Traders

Non-Commercials Traders (large speculators) is a category of traders specified in the Commitments of Traders Report (CoT report) which represents investors who are usually not involved in the production, processing or merchandising of gold.

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Non-Reportable Traders

Non-Reportables (small speculators) is a category of traders specified in the Commitments of Traders Report (CoT report) which represent small investors who hold position in futures that are below the reporting level specified by the Commodity Futures Trading Commission (CFTC). Since this catch-all category consists of individual speculators, it does not affect the gold market significantly (it controls a relatively small part of open interest, so it has a relatively weak position in the market).

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Nonfarm Payrolls

What is the favorite roll of the Sushi Chef? Payroll!

The nonfarm payroll employment represents the total number of paid U.S. workers, excluding proprietors, private household employees, unpaid volunteers, farm workers, and the unincorporated self-employed. This measure accounts for approximately 80 percent of the workers who contribute to the GDP. Thus, the analysts see it as a very insightful statistic, which can be used to determine the condition of the labor market. Since the nonfarm payrolls are considered to show the current state of economic activity, the National Bureau of Economic Research analyzes it to determine whether the economy is expanding or contracting. Nonfarm payrolls are also closely watched by the Fed, as they show whether and how quick the economy and inflationary pressure are growing (central bankers consider fast rates of job gains as potentially leading to an increase in inflation). The nonfarm payroll statistic is released monthly, on the first Friday of the month, by the U.S. Bureau of Labor Statistics as part of the Employment Situation Report on the state of the labor market.

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Normal Distribution

Normal distribution is the most popular way of describing random events. Some believe that assets’ prices move more or less randomly, so they use the normal distribution to make detailed estimations of future prices and risk.

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North Korea

North Korea, officially known as the Democratic People’s Republic of Korea (DPRK), is a country located in East Asia, in the northern half of the Korean Peninsula. In 1910-1945, Korea was a Japanese colony. After the surrender of Japan at the end of World War II, Korea was divided into two zones: the south was controlled by the Americans, while the north was occupied by the Soviets. The reunification talks failed and two separate governments were created in 1948: the capitalist Republic of Korea in the South and the communist Democratic People’s Republic of Korea in the North. Soon, the Korean War broke out, as the North invaded the South. The Soviet Union supported North Korea, while the U.S. supported South Korea. The military conflict lasted from 1950 to 1953, when the ceasefire was negotiated. However, South Korea and North Korea are still officially at war – and the U.S. continuously keeps troops in South Korea.

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Numismatic coins

Numismatic gold coins typically have a higher value for collectors than the face value on the gold coin or the value of the metal content due to the coin’s rarity or its age. Their usefulness to gold investors is usually limited and the same goes for silver numismatics.

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The New York Mercantile Exchange (Nymex) is a commodity futures exchange owned and operated by CME Group Inc., the largest derivatives marketplace in the world. Nymex was founded in 1872 and it is located in Manhattan, New York. It is the world’s largest physical commodity futures exchange, with mostly electronic trading since 2006. In 1994 it merged with the Commodity Exchange Inc. (Comex) under the Nymex name. Since then, Comex is officially Nymex’s division responsible for metals trading. Nymex specializes in energy carriers and some metals.

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