Glossary

A

ACCELERATED SUPPLY Gold reaching the market through mine hedging and finance transactions before it is physically produced - generally created by producer hedging or finance transactions.

ACTIVE DELIVERY MONTH The quoted Delivery Month on the most frequently traded futures contract on a futures exchange. Spot prices will be derived from the contract price for the active delivery month.

ALIQUOT A small representative sample taken from a gold bar for assay to determine its fine gold content.

ALLOCATED ACCOUNTS These accounts are opened when a customer requires metal to be physically segregated and needs a detailed list of weights and assays.

ALLOY A mixture of two or more chemical elements, including at least one metal. In the case of gold, it is mixed with a base metal or metals to lower the purity, influence the colour or add durability.

ARBITRAGE Simultaneous buying and selling of the same asset in different markets in order to capitalise on variations in price between those markets.

ASK The price a seller asks for gold or silver. (see also Offer).

ASSAY The testing of gold or silver to determine its fineness or purity.

ASSAYER A tester of precious metals to determine their purity.

ASSAY MARK The stamp by an assayer on a bar or piece of precious metal to guarantee its fineness.

ASSAY OFFICE An official or statutory organisation controlling the testing of precious metals within a country.

AVERAGING A method whereby a smoothing of the fluctuations in price movements may be achieved by agreeing to buy or sell a specified total quantity of gold or silver on the basis of the average price of the gold or silver fixings over an agreed period of time.

ASTM-Standard A definition of the impurities contained in precious metals.

B

BACKWARDATION A market situation where prices for future delivery are lower than the spot price, caused by shortage or tightness of supply.

BANK OF ENGLAND Founded in 1694. 'The Old Lady of Threadneedle Street' has been the focal point of gold and silver trading in London for over three centuries. It is one of the most active Central Banks in gold and is the gold depository for many of the world's Central Banks.

BAR CHART A type of chart commonly used in technical analysis that shows highs, lows and closing prices.

BASE METALS Metals that are not noble or precious and serve as a base for any object clad or covered with precious metals.

BEAR Someone who expects prices to fall.

BEAR MARKET A market in which the trend is for prices to decline.

BEAR POSITION A position taken by a dealer in a bear market, involving selling commodities, securities or currency without owning them. See also short selling.

BID The price at which a dealer is willing to buy.

BID – OFFER/ASK SPREAD the difference between the price at which a dealer is willing to buy (Bid) and sell (Offer/Ask) a commodity, security or currency. The Bid will be the lower of the two prices and the offer price the higher.

BIS Bank for International Settlements. Based in Basel, Switzerland, it was founded in 1930 and now acts as a non-political Central Bank for Central Banks.

BLANK A blank disc of metal with milled edges used to make a coin.

BRITANNIA British gold coin first issued in 1987 with a fineness of 916.6.

BROKER An intermediary between traders for physical, futures and over-the-counter deals. Brokers receive a fixed commission predetermined between the broker and his/her client.

BULL Someone who expects prices to rise.

BULL MARKET A market in which the trend is for prices to increase.

BULL POSITION When a dealer buys a commodity, security or currency without making a corresponding sale. See also long position.

BULLION The generic word for gold and silver in bar or ingot form. Originally meant 'mint' or 'melting place' from the old French word bouillon, which means boiling.

BULLION COINS Contemporary precious metal coins minted by official agencies in unlimited numbers for investment purposes.

BUYING FORWARD Buying commodities, securities or currency at a specified price for delivery at a future date.

BUY SIGNAL In technical analysis, a chart pattern which indicates a key reversal upwards in price and the time to buy.

BY-PRODUCT A secondary or additional mineral or mineral product from a mine, refinery or a secondary refinery.

C

CALL OPTION An option which gives the purchaser the right, but not the obligation, to buy an asset at a pre-determined price on or by a set date.

CARAT
1) A measure of the weight of precious stones. 1 carat = 0.2053 gm.
2) A measure of the proportion of gold in an gold alloy, on the basis that 24 carat is pure gold, often expressed as K or k, e.g. 18k is 75% gold.

CATALYST A chemical (metal) substance by which its mere presence accelerates, assists, retards or permits a chemical reaction but remains chemically unchanged in nature or amount at the end of the reaction.

COMMODITY FUTURES TRADING COMMISSION (CFTC) The United States Government's regulatory body for US future markets.

CHERVONETZ A Russian bullion coin, 900 fine with fine gold content of 0.2489 troy ounces and a face value of 10 roubles. Issued in the 1970s.

CHINESE WALL A barrier to the flow of information between two different parts of a firm's business.

CHOP Assay mark of Chinese origin.

CIP Cost, insurance and paid. A CIP price includes the cost of material together with transport and insurance costs to the final specified destination.

CLOSING PRICE The price at the end of the day's trading on a commodity market or stock exchange.

COIN GOLD A gold alloy, usually with a minimum fine gold content of 900, prepared for making coins, usually with silver or copper, to improve durability.

COMEX The Commodity Exchange in New York, a division of NYMEX.

COMMODITY A physical substance traded on a commodity market. Examples of hard commodities include platinum, copper and oil, whereas soft commodities include grain, cotton and rubber.

CONCENTRATE An enriched fraction of an ore after separation from other unwanted minerals.

CONSIGNMENT STOCKS These are gold or silver bars which are placed by an organisation with a client against a guarantee of payment at the prevailing price as the metal is taken out of the stock.

CONTANGO The market situation where the price for future (forward) delivery is greater than the spot price.

COST OF CARRY The cost of holding a physical commodity over a period of time. The main elements are funding costs, storage and insurance.

CYANIDATION The extraction of gold or silver by dissolving it in a weak solution of alkali metal cyanide.

D

DEALER An individual or organisation that buys and sells products.

DEFERRED SETTLEMENT An arrangement whereby settlement of both sides of a bullion deal, metal and money, are deferred on a day-to-day basis.

DELIVERY The actual transfer of the ownership of gold, silver or platinum and palladium. It may not involve physical movement of metal and is usually made by a simple paper transfer in the LBMA clearing system and LPPM system.

DELIVERY DATE The specified day on which gold, silver or platinum and palladium must be delivered to fulfil a contract.

DELIVERY MONTH The month in which commodities on a futures contract have to be delivered. See Active Delivery Month.

DERIVATIVE A financial instrument derived from a cash market commodity, futures contract or other financial instrument. Derivatives can be traded on regulated exchange markets or over-the-counter. For example, metal futures contracts are derivatives of physical commodities; options on futures are derivatives of futures contracts.

DORE An unrefined alloy of gold with variable quantities of silver and smaller quantities of base metals, which is produced at a mine before passing on to a refinery for upgrading to London Good Delivery standard.

DOUBLE BOTTOM/DOUBLE TOP In technical analysis, a double bottom occurs when the price falls to the same level twice and fails to penetrate. This signal is a good support. A double top is the opposite, ie, when a price rises to the same level twice and fails to break above it, and therefore produces a level of good resistance.

DOUBLE EAGLE Gold coin with a face value of US$20 issued as legal tender in the United States during the period 1850-1932. It is 900 fine with a fine gold content of 0.9675 troy ounces.

DUCTILITY The capacity of a metal to be hammered into a thin sheet or drawn into a fine wire without breaking.

E

EAGLE The first legal tender US gold coin first minted in 1795. It is 900 fine.

EFP Exchange For Physical. Actual exchange between an OTC contract and a futures contract which takes place off exchange between parties.

ELECTROLYSIS The process used for refining precious and other metals in which an electric current passes through an electrolyte (chemical solution) from anode to cathode. Impure metal dissolves at the anode and pure metal is deposted to the cathode.

EUROPEAN-STYLE OPTION An option that can only be exercised on the expiry date.

EXERCISE The exercise by an option holder of his right to buy (call) or sell (put) an asset at the agreed strike price.

EXPIRY DATE The last date on which an option can be exercised.

F

FINENESS The proportion of precious metal in an alloy expressed as parts in 1,000.

FINE WEIGHT The weight of precious metals contained in a bar, coin or bullion as determined by multiplying the gross weight by the fineness.

FIXING The mechanism for setting the price of a metal in an organised forum, at a set daily time.

FLAG In technical analysis, one of the basic chart patterns. In a bull market a flag occurs when prices consolidate for a period then continue to rise. In a bear market the converse occurs, ie, prices resume falling after a period of consolidation.

FOB Free on Board. A FOB price usually includes cost of transport, insurance and loading onto a vessel at the port of departure.

FOOL'S GOLD Pyrites of iron sulphide which is gold-like in appearance and can delude amateur prospectors.

FRA Forward Rate Agreement.

FUTURES CONTRACT An agreement to buy or sell a fixed quantity of a specified commodity, currency or security for delivery at a fixed date in the future at a fixed price. Futures contracts are standardised agreements traded on Futures Exchanges.

FORWARD PREMIUM The difference between spot and forward quotations which will be determined by money and precious metal interest rates and storage charges.

FORWARD PRICE The fixed price at which a specified amount of a commodity, currency or security is to be delivered on a fixed date in the future.

FORWARD TRANSACTION Purchase or sale for delivery and payment at an agreed date in the future.

FSA Financial Services Authority. The single financial services regulator in the United Kingdom.

FUNDAMENTAL ANALYSIS The study of basic underlying factors which will affect the supply and demand of the commodity being traded.

FUTURES CONTRACT An agreement made on an organised exchange to buy or sell a specific commodity or financial instrument on a set date in the future at a set price. In practice, most futures positions are 'squared off' before maturity with delivery, if it takes place, in the form of a warehouse receipt.

G

GOFO The LBMA Reuters page of gold forward rates denominated in US dollars.

GOLD Latin name Aurum. Chemical symbol Au. Its specific gravity is 19.32 and melting point 1063°c.

GOLD ACCUMULATION PLANS (GAPS) Gold investment accounts whereby the investor agrees to invest a certain sum of currency in gold each month. Gold accumulated in the account can later be sold back or withdrawn as physical metal in a variety of forms, including bars, coins or jewellery.

GOLD FIXING Held twice each working day at 10.30 am and 3.00 pm in the City of London. For more information, see About the Fixings

GOLD LOAN The provision of finance in gold for a gold-related project or business, typically in mining or jewellery inventory finance, which provides a combination of generally inexpensive funding together with built-in hedging.

GOLD PARITY Legally fixed quantity of gold to which a monetary unit is pegged.

GOLD POOL The gold pool was an alliance between the Central Banks of Britain, Belgium, France, Italy, the Netherlands, Switzerland, the United States and West Germany from 1961 to 1968 which endeavoured to maintain the gold price at US$35 dollars per troy ounce.

GOLD/SILVER RATIO The number of ounces of silver that can be bought with one ounce of gold.

GOLD STANDARD A monetary system with a fixed price for gold, and with gold coin either forming the whole circulation of currency within a country or with notes representing and redeemable in gold.

GOLD WARRANT
1. A warrant giving the buyer the right to buy gold at a specific price on a specified value date, for which the buyer pays a premium. While similar in structure to options, warrants are securitised instruments.
2. A certificate often issued by exchanges indicating ownership of physical metal.

GOOD DELIVERY The specification which a bar must meet in order to be acceptable for delivery in a particular terminal market or futures exchange, eg, London Good Delivery. (see also LBMA Good Delivery Lists.)

GRAIN One of the earliest units of weight for gold; one grain being the equivalent of one grain of wheat taken from the middle of the ear. 1 grain = 0.0648 grams or 0.002083 troy ounces. 15.43 grains = 1 gram; 480.6 grains = 1 troy ounce; 24 grains = 1 pennyweight. See also Granules.

GRANULES Bullion, including its various alloys presented for sale in granulated form, often referred to as grain.

GUINEA British gold coin with a nominal value of £1 first issued in 1663 and named after gold from Guinea in West Africa. It was unofficially revalued at 21 shillings at The Great Recoinage of 1696, a value confirmed in 1717. It has a fineness of 916.6 and a fine gold content of approximately ? troy ounce.

H

HALLMARK A mark or number of marks made on gold or silver jewellery and other fabricated products to confirm that the quality is of the carat fineness marked on the item.

HEAD AND SHOULDERS A three-peak pattern resembling the head and shoulders outline of a person, which is used to chart stock and commodity price trends. The pattern indicates the reversal of a trend. As prices move down to the right shoulder, a head and shoulders top is formed, meaning that prices should be falling. A reverse head and shoulders pattern has the head formation at the bottom of the chart and means that prices should be rising.

HEDGE A transaction entered into in order to offset the impact of adverse price movements of an asset.

HERAEUS FABRICATED PRICE for precious metals in fabricated form (precious metal products) and payment upon delivery of the product.

HERAEUS UNFABRICATED PRECIOUS METAL PRICE for ingots or grains or other precious metal in raw material form for immediate payment.

HONG KONG GOLD AND SILVER EXCHANGE Hong Kong's exchange first opened in 1910 and became the Chinese Gold and Silver Exchange Society in 1918.

I

IMF The International Monetary Fund was conceived at the Bretton Woods Conference in 1944 to promote international monetary co-operation and stability. It opened in Washington DC in 1947.

INGOT form of metal bar, often a preferred form for delivery. Derived from casting into a simple shape for hot working or remelting.

INTERNATIONAL PRECIOUS METALS INSTITUTE (IPMI) An international association of producers, refiners, fabricators, scientists, users, financial institutions, merchants, private and public sector groups, and the general precious metals community formed to provide a forum for the exchange of information and technology.

IRS Interest Rate Swap.

ISDA The International Swaps & Derivatives Association.

ISTANBUL GOLD EXCHANGE The Istanbul Gold Exchange was founded in 1995.

K

KAM Chinese for gold.

KEY REVERSAL In technical analysis, a crucial change in price direction, signalling an end to either a bull or bear market.

KILO BAR A popular small gold bar. A one-Kg bar .995 fine = 31.990 troy ounces, and a one-KG bar 9999 fine = 32.148 troy ounces.

KRUGERRAND South African gold coin first issued in 1967 with a fineness of 916.6.

L

LAKH (OR LAC) Indian term for 100,000. Frequently used to describe silver or gold orders.

LBMA The London Bullion Market Association was formally incorporated on 14 December 1987 to represent the interests of the participants in the wholesale bullion market and to encourage the development of the London market in every possible way.

LBMA GOOD DELIVERY LISTS Lists of acceptable refiners of gold and silver whose bars meet the required standard (of fineness, weight, marks and appearance) of the London Bullion Market Association.

LEASE RATE: See precious metal lease rate.

LEACHING The extraction of a soluble metallic compound from ore by dissolving the metals in a solvent.

LIMIT ORDER An order that has restrictions placed on it. The customer specifies a price and the order can only be executed if the market moves to or betters that price.

LIQUIDITY The market tradability of an asset. A highly liquid market has a large number of buyers and sellers, or lenders, making it easy to enter or exit.

LOCATION SWAP The dealer practice of exchanging a quantity of metal in one location for an equal quantity of metal in alternative location held by another dealer. Location swaps help to reduce shipping costs and can reduce manufacturing leadtimes.

LOCO The place - location - at which a commodity, e.g. loco London gold, is physically held.

LOCO LONDON Good delivery gold, for settlement on account in London.

LONDON PLATINUM & PALLADIUM MARKET FIXINGS The London Platinum & Palladium Market (LPPM) Fixings (Pt and Pd only) – Sometimes referred to as the London Fix, is a snapshot of the price taken each day at 09:45 (am fix) and 14:00 (pm fix) London time. It serves as a reference point and is published widely. The fix is a bid price loco Zurich plate – a price which the members of the LPPM would have been prepared to pay for platinum and palladium in the form of plate or ingot, deposited in a Zurich vault. Customers can instruct dealers to purchase metal at the fix price prior to the fix but they will incur charges for brokerage, conversion and transportation. Again payment is generally due within two days and of course buyers do not have the benefit of knowing what the price is before they purchase. Prices have been known to move considerably between fixes!

LONG A long position means the purchase and retention of an asset.

LONG LIQUIDATION Reducing the amount of a commodity, security or contracts held.

LOT Commonly used word for a standard futures contract.

LPPM The London Platinum and Palladium Market.

M

MAPLE LEAF Canadian gold coin with a fineness of 999.9.

MARGIN Deposit, or collateral, required as security against open positions in futures, forwards or options markets. Also called 'Initial Margin' or 'Original Margin'.

MARGIN CALL The request for additional funds to cover losses on forward or futures contracts where the price has moved against a client. See also Variation Margin.

MARKET ORDER An order given to a dealer for immediate execution, to buy or sell at the best prevailing price. Also known as 'At Best' or 'At Market'.

MARK TO MARKET The revaluation of a position at current market price levels.

MILL The plant facility where the ore is reduced through crushing and grinding, then it becomes a concentrate through flotation or gravity separations.

MINING The extraction of economically important minerals and ores from the earth.

MOVING AVERAGE In technical analysis this is a key trend line that is plotted on a bar chart, reflecting the progress or prices over a given period of time.

N

NEW YORK MERCANTILE EXCHANGE (NYMEX) The largest physical commodity exchange in the world. Futures contracts are traded on the Exchange in an anonymous, open, and competitive auction, based on open outcry. The exchange acts as the counterparty on every trade, clearing (matching) orders amongst the members. The Exchange's platinum contract is the longest continuously traded precious metals contract in the world's marketplace, first traded in 1956.

NAPOLEON French gold coin with a face value of 20 francs, bearing a portrait of Napoleon I or Napoleon III. It had a fineness of 900 and a fine gold content of 0.1867 troy ounces.

NUMISMATICS The specialised sector of the coin business for the study and collection of rare coins and other media of exchange, particularly those with archaeological and historic interest.

NUGGET A water-worn piece of precious metal found in nature, usually implying some size

NYMEX A US futures exchange consisting of two divisions, NYMEX (the New York Mercantile Exchange) and COMEX (the Commodities Exchange).

O

OFFER The price at which a dealer is willing to sell. See also Ask.

OPEN INTEREST On a futures exchange the daily statistic that indicates the number of open contracts, ie, those which have not been fulfilled or closed out.

OPEN OUTCRY A style of trading conducted on a futures exchange in a ring or a pit where dealers face each other, calling out the price, contract, month and number of contracts.

OPEN POSITION A market position which has not been closed out.

OPTION An option is the right but not the obligation to buy and sell a pre-determined quantity of an underlying asset at a pre-determined price by or on a defined date.

ORE Originally from the Old English for crude or unwrought metal. It refers to any economic mineral deposit of precious or other metals.

OTC Over The Counter. Transactions that are quoted and conducted between parties on a principal-to-principal basis as opposd to being traded via a broker on an exchange.

OVERBOUGHT A market in which the price, under excessive buying pressure, has risen too high and too fast without genuine fundamental support to maintain the new level.

OVERSOLD A market which has fallen too far and too fast under excessive selling pressure and is expected to move back to a higher, more neutral level.

P

PANDA Chinese gold coin of 999.9 quality, first made in 1982.

PANNING The classic and simple method of mining alluvial gold.

PAPER GOLD A term used to describe gold contracts such as loco London deals and futures contracts which do not necessarily involve the delivery of physical gold.

PENNYWEIGHT Originally the weight of a silver penny in Britain in the Middle Ages which is still widely used in North America as the unit of weight in the jewellery trade. 20 pennyweights = 1 troy ounce.

PHILHARMONIKER Austrian gold coin of 999.9 fineness, first issued in 1989.

PLATE Bullion form of metal.

PLATINUM GROUP ELEMENTS/PLATINUM GROUP METALS (PGE/PGM) The six metallic elements platinum, palladium, rhodium, ruthenium, iridium and osmium. (PGM properties link)

PRECIOUS METALS Metals of great value being gold, silver, platinum and other platinum group metals.

PRECIOUS METAL LEASE RATE An interest rate charged for borrowing precious metal.

PUT OPTION A contract which gives the buyer the right, but not the obligation, to sell a specified amount of an asset at a predetermined price on or before a specified date.

Q

QUARTATION The process in which silver is separated from gold by dissolving it out with nitric acid, more commonly referred to as nitric acid parting.

R

RALLY A considerable rise in the value of a commodity, security or market after a decline.

REEF A metallic mineral deposit, especially gold-bearing, commonly in a sedimentary rock.

REFINING The separating and purifying of gold and silver from other metals.

RESISTANCE In technical analysis, the price level where selling is expected to emerge.

RISK The exposure to adverse market movements, mischance or the possibility of losing money.

ROLLED GOLD The process in which a layer of carat gold alloy is mechanically bonded to another metal.

S

SAMPLING The selection of a small but representative part of an ore body or process material for analysis.

SCRAP GOLD The broad term for any gold which is sent back to a refiner or processor for recycling.

SELL SIGNAL In technical analysis, a chart pattern which indicates a key reversal downwards in price.

SETTLEMENT DATE The date on which a contract must be fully paid for and delivered. It is the general practice in international bullion markets for settlement to take place two business days after the transaction date, i.e., spot.

SETTLEMENT PRICE In futures markets, the price that is set by the exchange committee at the end of each trading day and which is used by the clearing house to market open positions and assess margin calls.

SETTLEMENT RISK The risk that arises when payments are not exchanged simultaneouslly, generally arising due to time differences. One party to a transaction must effect payment or delivery in an earlier time zone without having confirmation of the receipt of a reciprocal asset in a later time zone.

SFA The Securities and Futures Authority (an SRO) is responsible for the regulation of investment business in the UK. It will be superseded by the FSA late in 2001 when the FSMA comes into force.

SHORT A short position means the sale of an asset not yet owned.

SHORT SELLING (i) A strategy in which a speculator sells a commodity or security that he or she does not own in order to profit from a falling market. The speculator will borrow the commodity or security from a third party and then immediately sell on to the buyer. At a later date, the speculator must make good on the loan by buying back the commodity or security from the market to close the position. If the value of the commodity or security has fallen during this period the speculator's profit will be the difference between his original sale price and the buyback price (minus interest charges and fees). However, if the market moves against the speculator there is the potential for limitless losses. (ii) Selling a futures contract.

SHORT COVERING The act of buying back a commodity, security or opposing futures contract to close out a short position.

SHORT POSITION Position resulting from a short selling strategy.

SIB The Securities and Investment Board, the main regulator of Financial Services in the UK.

SILVER Latin name Argentum. The chemical symbol Ag, relative density is 10.5 and the melting point 960°c.

SILVER FIXING Held each working day at 12.00 pm in the City of London. For more information.

SIMEX The Singapore International Monetary Exchange was established in 1983 from an alliance between the Gold Exchange of Singapore and the International Money Market (IMM) in Chicago.

SMELTING The process of melting ores or concentrates to separate out gold or silver from impurities.

SOUK The local name for market used throughout the Arab world.

SOVEREIGN British gold coin with face value of one pound sterling, a fineness of 916.6 and a fine gold content of 0.2354 troy ounces.

SPONGE A powdered form of a pgm. Commonly, the form required for manufacture of many pgm-based chemicals and catalysts.

SPOT MARKET A market in which commodities are bought and sold for cash and immediate delivery.

SPOT MONTH The nearest delivery month on a futures contract.

SPOT PRICE The delivery price of a commodity being traded on a spot market.

SPOT PURCHASING Purchasing a commodity in the spot market for immediate payment and delivery (typically two working days).

SPOT SETTLEMENT Delivery of metal and payment of money, which takes place two business days after the transaction date.

SPOT DEFERRED A forward sale contract with no fixed delivery, but with the facility to roll forward the pricing of a contract at pre-determined intervals on the basis of current interest rates. This gives more flexiblity than conventional forward contracts.

SPREAD The difference between the current bid and offer (ask) prices for a commodity or security.

SQUARE POSITION see closed position.

SROs Self Regulatory Organisations were established under the Financial Services Act of 1986 to carry out the regulation of most institutions involved in investment activities in the UK. Under FSMA, the role played by SROs will be taken over by the FSA late in 2001.

STANDARD BAR
1) Gold bar weighing approximately 400 ounces or 12.5 kilograms and having a minimum fineness of 995 parts per 1,000 pure gold.
2) Silver bar weighing approximately 1,000 ounces with a minimum fineness of 999.

STANDARD DEVIATION Statistical measure of the degree to which an individual value in a probability distribution tends to vary from the mean of the distribution. Indicates probability of a variable or price falling within a certain width or band around the mean.

STOCKPILE Broken ore accumulated in a heap at the mine's surface, pending treatment or shipment to mill, or a stock of metals kept by a government for emergencies.

STOP LOSS An order placed to liquidate an open position when the price reaches a specified level in order to prevent further losses. These orders are only handled on a 'best efforts' basis as there is no guarantee that an order can be executed at the specified price if the market is highly volatile and prices move so fast, or 'gap', so that the order cannot be carried out at the price requested.

STRIKE PRICE In options, the pre-determined price at which an option may be exercised.

SUPPORT In technical analysis, the price level where new buyers are expected to emerge.

SWAP
1)Simultaneous purchase and sale of spot against forward.
2)An exchange between locations.
3)A swap or exchange of different size or quality of gold bars.
4)An agreement whereby a floating price is exchanged for a fixed price over a specified period.
5)SWITCH Simultaneous purchase and sale of the same asset for different maturity dates.

T

TAEL Traditional Chinese unit of weight for gold. 1 tael = 1.20337 troy ounces = 37.4290 grams. The nominal fineness of a Hong Kong tael bar is 990 but in Taiwan 5 and 10 tael bars can be 999.9 fine.

TECHNICAL ANALYSIS The study of historical prices, examining patterns of price change, rates of change, and changes in volume of trading and open interest, in order to predict future price behaviour. Technical Analysis is usually performed in chart or graph form.

TOCOM The Tokyo Commodity Exchange, established in 1984.

TOKYO COMMODITY EXCHANGE (TOCOM) The Japanese futures exchange, which has offered platinum contracts since 1984 and palladium contracts since 1992. Unlike NYMEX, trading of these contracts is conducted electronically and not by open outcry. TOCOM trading also differs in that the exchange does not act as the counterparty for all members through the clearing process.

TOLA Traditional Indian unit of weight for gold. One tola = 0.375 troy ounces = 11.6638 grams. The most popular sized bar is 10 tola = 3.75 troy ounces.

TOM/NEXT Refers to the time period commencing one business day forward from the present and ending one business day later (usually spot). In bullion, generally refers to the swap rate for borrowing or lending metal vs. US$ for this time period, which is typically used to manage short-term liquidity flows.

TRADE DATE The date on which a trade is executed for a specified value date.

TRADING VOLUME (i)The total number of contracts traded in a set period of time on a futures exchange. (ii) The amount of a physical commodity, security or currency traded in a particular market or during a set period of time.

TROY OUNCE The traditional unit of weight used for precious metals which was attributed to a weight used in Troyes, France, in medieval times. One troy ounce is equal to 1.0971428 ounces avoirdupois.

U

UNALLOCATED ACCOUNT An account where specific bars are not set aside and the customer has a general entitlement to the metal. This is the most convenient, cheapest and most commonly used method of holding metal. The holder is an unsecured creditor.

UNDERLYING The variable on which a futures, option or other derivative contract is based.

V

VALUE DATE The date agreed between parties for the settlement of a transaction.

VANILLA OPTION A standard transaction that is not tailored to the needs of either party.

VARIATION MARGIN Additional margin, or collateral payable by an investor, resulting from an adverse movement in the price of the underlying asset in a forward, futures or options contract.

VOLATILITY Refers to options. The rate of change in the price of the underlying asset. (see also Implied Volatility and Historic Volatility).

VOLUME On futures exchanges, the number of contracts traded in a session.

VRENELI Swiss gold coin with a face value of 20 francs issued as legal tender in the period 1897-1935. It had a fineness of 900 and a fine gold content of 0.1867 troy ounces.

W

WAFER A thin gold bar popular in the Middle East, South East Asia and Japan.

WAREHOUSE RECEIPT A warehouse or depository receipt is issued when delivery is taken on a futures exchange. It specifies the quantity and fineness of gold or silver held.

WHITE GOLD A gold alloy containing whitening agents such as silver, palladium or nickel as wel as other base metals. Often used as a setting for diamond jewellery.

WRITER In options, the seller or granter of the option.

Y

YIELD CURVE The relationship between interest rate yields and maturity lengths. The yield curve normally has a positive slope (ie, upwards) because yields on long-term interest rates usually exceed short-term yields. An investor expects a higher return for holding an asset for a longer time, hence yields normally increase with maturity length.

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