Gold has been coveted for centuries for its unique blend of rarity, beauty, and near indestructibility. The Egyptians mined gold before 2,000 BC. The first known, pure gold coin was made on the orders of King Croesus of Lydia in the sixth century BC.
Following the California gold discovery of 1848, North America became the world’s major gold supplier. From 1850 to 1875, more gold was discovered here than in the previous 350 years. By 1890, the gold fields of Alaska and the Yukon were the principal sources of supply and, shortly afterwards, discoveries in the African Transvaal indicated deposits that exceeded even these. Today, the principal gold producing countries include South Africa, the United States, Australia, Canada, China, Indonesia, and Russia.
Gold is found in nature in quartz veins and secondary alluvial deposits as a free metal. Because it is virtually indestructible, much of the gold that has ever been mined still exists above ground in one form or another.
Gold is a vital industrial commodity. Pure gold is one of the most malleable and ductile of all the metals. It is a good conductor of heat and electricity. The prime industrial use of gold is in electronics. Another important sector is dental gold where it has been used for almost 3,000 years. Other applications for gold include decorative gold leaf, reflective glass, and jewelry.
In 1792, the United States first assigned a formal monetary role for gold when Congress put the nation’s currency on a bimetallic standard, backing it with gold and silver. Under the gold standard, the U.S. government was willing to exchange its paper currency for a set amount of gold, meaning the paper currency was backed by a physical asset with real value. However, President Nixon in 1971 severed the convertibility between the U.S. dollar and gold, which led to the breakdown of the Bretton Woods international payments system. Since then, the prices of gold and of paper currencies have floated freely. U.S. and other central banks now hold physical gold reserves primarily as a store of wealth.
The mini-sized Gold futures contract trades on the London International Financial Futures and Options Exchange or Liffe. Liffe is now part of the NYSE Euronext exchange. The market opens at 7:16 PM ET and closes the following day at 5:00 PM ET, Sunday through Friday.
One mini-sized Gold futures contract is 33.2 fine troy ounces. The contract is 1/3 the size (100 troy ounces) of the standard Gold futures contract.
The performance bond or initial margin requirement to initiate one mini-sized futures contract is $2,867 (as of November 12, 2012). To control that mini-sized futures contract going forward the maintenance margin becomes $2,250 (as of November 12, 2012).
One mini-sized Gold futures contract price increment or “tick” is 1/10 per ounce. A one “tick” move is $3.32. Therefore a full dollar move, 1712.0 to 1711.0, for example, is $33.20.
The mini-sized Gold futures contract month listings are the current calendar month (for delivery purposes) plus the next 2 months. Any February (G), April (J), August (Q), and October (V) within 23 months of the current calendar month. Any June (M) and December (Z) within 60 months of the current calendar month.
The mini-sized Gold futures contract’s Last Trading Date (LTD) is the third to last business day of the contract month at 1:30 PM ET. The December 2012 mini-sized Gold futures contract LTD is December 27, 2012 for example.
Long positions, to avoid delivery risk, must be offset prior to the close of the trading session ending on the second business day prior to the first business day of the contract month. The last day a Short position can notify the exchange of intent to deliver is the second business day prior to the Last Delivery Day.
The mini-sized Gold futures contract is deliverable in which the buyer receives one vault receipt representing one bar or one warehouse depository receipt representing 1/3 interest in one 100 ounce gold NYSE Liffe U.S. vault receipts.
Use stop loss and target orders as this particular market trades virtually around the clock and can be volatile.
Visit https://www.danielstrading.com/ for additional contract specifications and market information regarding the Gold futures market.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.