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Ticker: GC
Exchange: NYMEX
Trading Hours:8:20 A.M. - 1:30 P.M. (EST)
Contract Size: 100 oz
Contract Months:Feb,Apr,Jun,Aug,Oct,Dec
Price Quote:$ / oz., $1 = $100
Tick Size:10 pts = $10
Last Trading Day: Trading terminates at the close of business on the third to last business day of the maturing delivery month.
Daily Price Limit:Initial price limit, based upon the preceding day's settlement price is $75 per ounce.


40 Yr Seasonal Chart Long-Term Chart Supply & Demand Tables

Fundamental Overview:

What is it?

Gold is classified as a yellow metal with a variety of uses. Not only does it have excellent industrial properties, it also has been considered one of the safest places to hold your money in times of financial or political uncertainty. As an old saying says, "gold will always be gold." The quality of gold is measured in karats. Since 24 karat gold is pure gold, each karat represents 1/24 of pure gold in an alloy.

Gold refining surged following the first voyage of Columbus. Colombia, Peru, Ecuador, Panama, and Hispaniola contributed 61% of the world's newfound gold during the 17th century, 80% during the18th century. Following the California gold discovery of 1848, North America became the world's major gold supplier, and from 1850 to 1875, more gold was discovered 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 world's unmined reserves are estimated at 1 billion troy ounces, about half of which is located in the Witwatersrand area of South Africa.

In 1792, Congress put the nation's currency on a bimetallic standard of gold and silver. During the Great Depression, most nations were forced to sever their currency from gold. By 1944 Gold became the standard again when the Bretton Woods agreement fixed all the world's paper currencies in relation to the U.S. dollar, which in turn was tied to gold. The agreement was in force until 1971, when President Nixon effectively cancelled it by ending the convertibility of the dollar into gold. Today, gold prices float freely in accordance with supply and demand, responding quickly to political and economic events.

What are its uses?

Gold is a vital industrial commodity. It is an excellent conductor of electricity, is extremely resistant to corrosion, and is one of the most chemically stable of the elements, making it critically important in electronics and other high-tech applications. Gold's industrial uses include applications in the dentistry, space, defense, and electronic industries. Gold is primarily used, however, for jewelry and for the production of gold coins.

While gold has been used for international exchange for centuries, it was not until the 1944 Bretton Woods Agreement that gold was used as such a measure of value. In order to stabilize the price of the falling US dollar, the act set the conversion rate of gold to dollars at $35 per ounce. Then in 1971 the Smithsonian Agreement allowed gold prices to float and be determined by the free market.

Where is it produced?

South Africa is the world's largest supplier of gold accounting for over 50%. Russia is the second largest producer, with Canada and the U.S. at third and fourth respectively.

What determines the market price?

The price of gold is dependent more upon its use as a medium of international exchange than for its industrial applications. Due to the importance of the US dollar in the global financial system, if the dollar is strong against most other currencies, it is usually strong against gold as well, and vice versa.

Political factors also affect the price of gold. Wars and political unrest in other parts of the world often strengthen gold against the dollar. Sales of gold by central banks increase the supply of gold on the market and therefore have a negative affect on its price.

The majority of gold futures are traded on the NYMEX in New York. The contract is for 100 troy ounces. The delivery months are February, April, June, August, October, and December. The contract is quoted in dollars per ounce, with a minimum price fluctuation on $.10 per ounce.

Notes

Since gold is seen primarily as a financial vehicle, it is considered as an inflationary hedge. When inflation is high, interest rates are high, which will mean an increase in gold prices. Gold is considered by many as a trending market and therefore may prove to be a good stable market for a newer trader. The trader should be aware, however, that during times of uncertainty, gold prices can become quite volatile in a short period of time This is especially true in times of high gold prices.






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