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

A safe-haven asset is an asset that is uncorrelated (weak safe-haven) or negatively correlated (strong safe haven) with another asset or portfolio in times of market stress or turmoil. So, a safe-haven asset protects investors during crises, but not necessarily during normal times. Hence, a safe-haven asset is expected to retain its value or even increase in value during times of market turbulence when most asset prices decline.

One of the most important economic and investing puzzles is how to spot a recessions. There are myriads of indicators and people are constantly creating new ones! The recent example of a new recessionary measures is the Sahm Rule Recession Indicator, developed by Claudia Sahm, the Fed economist.

Tendency for a given market to outperform or underperform during a given time in a year that can be profitably traded.

The U.S. Securities and Exchange Commission (SEC), based in Washington, D.C., is an independent U.S. federal agency created in 1934 that regulates securities markets (like gold stocks). The stated mission of the SEC is to “protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.”

Senior Mining Stocks (a.k.a. Seniors) are stocks of a considerably large commodity (e.g. gold) producing mining companies with an established position and relatively large market capitalization. Senior stocks are usually perceived as being less risky than junior stocks (stocks of my smaller mining companies); they are more liquid and their prices are typically subject to less volatility.

A shooting star is a pattern in the price of an asset. It is usually found in an uptrend and suggests a bearish outlook and a potential reversal. In other words, it’s one of the reversal patterns. The pattern is on one specific period of trading, usually one day, week or month, depending on the time horizon you consider. The main tenet of this pattern is that the price moves up fueled by buying but then reverses and erases most of the move up or even the entire move up. It hints at the possibility that the buying power is drying up and that more selling is to occur.

Short Selling (also known as “going short” or simply “shorting”) is a way of profiting on lower prices. It’s the practice of selling borrowed (from the broker) assets, with the aim to buy them back later and return to the lender. Short sellers assume that they will be able to buy the stock back at a lower price than they sold short and thus profit.

Have you ever tried to squeeze your toothpaste out of the tube? If so, you know that it’s practically impossible to squeeze out the last remains of the paste. A short squeeze is possible – as GameStop’s drama reminds us – and it’s a nightmare for all short-sellers.

So, what is a short squeeze? It’s a rapid jump in the price of a stock or other asset that squeezes out the short-sellers from the market, forcing them to buy back the shares. But the catch is that when they are forced to cover their positions, the price is pushed even higher, causing even more short sellers to capitulate.

Short-term trades are trades that terminate within a short period from their inception. They can be very profitable, but they are also very risky.

Chemically, silver is an element with the symbol Ag and atomic number 47. It belongs to noble metals. Silver is in gold’s shadow, although it is also a unique metal. It is much more abundant than gold, but silver is still one of the least naturally occurring metals. In the Earth’s crust, silver occurs 800 times less frequently than copper. In pure form it has a brilliant white metallic luster.

Silver served as money for thousands of year until the gold standard was introduced in the XIX century. Although not money, silver is used as an investment. Like gold, silver is a monetary asset, which may be used as a hedge or safe-haven against tail risks. However, silver is much more widely used in the industry; therefore it behaves more like commodity and is more business cycle-sensitive than gold.

The price of silver, as each price, is determined by the market forces of demand and supply. The demand is the amount of a good demanded for purchase at each price. Therefore, the demand for silver is the amount of silver demanded for purchase at each price. The silver demand is often analyzed on an annual basis and divided into jewelry demand and silverware, industrial demand, and coins and bars.