Explanations of "Gold" investment-related terms A to Z

The Gold Forward Offered Rate (GOFO) is the swap rate for a gold-to-U.S. dollar exchange. It is not the price to lease gold but rather the price to swap gold for U.S. dollars. In other words, it is a rate at which someone is ready to exchange gold for the greenback. You can think of GOFO as the interest rate on a U.S. dollar loan secured by gold as collateral. Since a swap can be described as a series of forward contracts, the Gold Forward Offered Rate resembles the gold forward rate and may be interpreted as the difference between the U.S. dollar interest rate (LIBOR) and the gold lease rate (GLR).

In the gold market, there are many derivatives available for investors who want to hedge or speculate. They may use gold futures which are quoted on exchanges (like Comex). In the over-the-counter market, gold forwards and swaps are traded instead.

Some hedge funds specialize in the gold market and in this case, one can benefit from both: gold's price gains, and portfolio manager's abilities. Naturally, there are some drawbacks as well, such as the fee that the fund charges.

Once upon a time, a little girl called Goldilocks came to a house of Three Bears... We guess that you have heard the whole story. For sure, you have, Goldilocks and the Three Bears is one of the most popular fairy tales in the Western world. Now, you might wonder why we refer to the story for children in the dictionary for terms related to the precious metals investing. The reason is, of course, the Goldilocks economy we still have, to the despair of gold bulls.

What is gold inventory? Well, inventory usually means goods available for sale or raw materials used to produce these goods. In other words, it is the goods and materials that companies hold for the ultimate goal of resale. Hence, we could say that all gold held by jewelers, dentists and technology companies is gold inventory. The same applies to gold coins or gold bars held by bullion dealers.

Gold as a time-proven hedge against inflation. In the Roman era, one ounce of gold got you a toga, sandals and belt. These days, it still buys you a decent men's suit. So, it surely pays off to consider the king of metals when planning to maintain your purchasing power in retirement.

The gold lease rate (GLR) is the cost of borrowing gold. Yes, you heard correctly. Gold may be lent and borrowed, just like any other asset or currency. Therefore, contrary to common opinions (Warrant Buffet is perhaps the most famous representative of such beliefs), gold may have a yield and may bear interest. Some entities operating in the wholesale gold market do lend gold and earn interest on such transactions. They are usually referred to as lease transactions and the interest rate applied to such lending is called the gold lease rate.

Gold market manipulation, called also gold price manipulation, can be defined broadly as a purposeful effort to control gold prices. This sort of manipulation exists in financial markets as traders try to influence the markets (in this case, the gold market). It may be responsible for some short-term aberrations in asset prices, including the price of gold. However, there is another, more specific definition. According to the U.S. Securities and Exchange Commission, manipulation is intentional conduct designed to deceive investors by controlling or artificially affecting the market for a security… [This includes] rigging quotes, prices or trades to create a false or deceptive picture of the demand for a security. A popular belief within the gold investing community is that gold prices are manipulated, generally downwards, in what is described as price suppression.

One of the largest investment banks in the world, founded in 1869 in New York. A primary dealer in the United States Treasury security market, which has revolving door relationship with the U.S. government. It’s believed by many to be the world’s most evil investment bank, which faces many controversies and legal issues. Goldman Sachs. The bank that allegedly runs the world and whose tentacles squeeze the globe. Let’s analyze its link with gold – and whether its collapse is coming, which some analyst are afraid of.

The Gold Miners Bullish Percent Index ($BPGDM) is a gauge of overbought and oversold conditions for the gold mining sector. It is a breadth indicator based on the number of stocks with Point & Figure buy signals (a Point & Figure chart emphasizes strong moves while ignoring small ones) within this index.

Gold is one of the rarest elements in the world. Gold is estimated to make up about 0.003-0.004 parts per million of the earth’s crust. It means that, gold occurs in it about 19 times less frequently than silver and 15 thousand times less frequently than copper. In 2017, global gold mine production was 3,305 tons. That supply was mined in many locations (that geographical dispersion is one of the reasons why gold was historically used as money). But what countries produce the most gold?

How much does gold cost? Why are you asking about it? Just look at kitco.com and do not bother us! Yeah, sure, we know what the price of gold per ounce is. But how much does it cost to produce it?