5 Top Insider Trading Tips Used By Your Gold Fund Manager

5 Top Insider Trading Tips Used By Your Gold Fund Manager

by

JacquelineBrewster

On an international level, gold is mostly traded over-the-counter, not through exchanges. This is done through forward contracts, which are non-standardized agreements to trade gold in the future at a price agreed today, currently known as futures. London is the largest global centre for such transactions.

The forward market for gold is less driven by supply and demand than other commodity markets. Instead, spot (immediate) prices and interest rate differentials run the market, like in the case of currency. Typically, the gold market is in contagno, which means that the forward (contractually agreed) price of gold is higher than the spot price(quoted for immediate payments and deliveries). This makes gold market attractive for gold producers making forward sales. Also there is a notable derivatives market for gold, both for speculating and for hedging (insurance) purposes. Gold accounts can be allocated and unallocated. Unallocated accounts represent over 14% of the pool at the London Bullion Market Association (LBMA). There is little information concerning the backing of unallocated gold, but LBMA unallocated accounts are believed to be backed up by physical gold only in part. So, in case of a sudden large demand for physical gold, the LBMA would react similarly to a bank in shortage of liquidities, with the unallocated accounts being at risk of loss. Your expectancies from gold should be similar to those you would have from stable currency. With paper money, few people simply store savings, but manage their possessions in forms that allow for capital increase. Some prefer extra gains over short periods of time, while others trust more in a slow but steady increase. Nevertheless, we all have tips for investing our money wisely. The same general idea should apply when investing in gold. Avoid collecting physically allocated gold if you need insurance. Directly owned bullion coins and bars are more appropriate for short time speculative type investments. And remember that gold exchange-traded products: EFT’s, CEF’s and ETN’s, come with significant counter party risks. Some of these are based on unallocated accounts, a situation involving supplementary risks you will have to take. Investing in mining shares is an accessible method of trading gold but it is hardly for beginners and also not very suitable for long term purposes because of specific risks. Mining shares prices fluctuate on the stock market, while gold price fluctuates at a different pace. The risk is that of situations where shares depreciate while gold appreciates. If you purchase through mutual funds, the risk of faulty management may lower but the counter party risks will add up. If you are seeking long term insurance, invest in gold funds. Gold funds are a form of investment with minimal risks, just like possessing physical gold, but with a steady return of investments. The greater part of their investment consists of physically allocated gold which is stored in secure vaults of banks. Gold funds have a limited number of qualified investors. More customizable than mutual funds, they allow for a large number of financial operations to be performed and are capable to ensure positive ROI, less related to overall market performance.

The

Hinde Capitalgold funds

offer investors the opportunity to seek the preservation of capital in gold, against the potential erosion of the purchasing power of fiat paper money.

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5 Top Insider Trading Tips Used By Your Gold Fund Manager