A new investment strategy is sweeping developing countries, such as China and the Middle East. This investment strategy is the investment of gold. A new class of investors is adding a twist to the market. The rush to invest gold has helped in the increasing prices. This week, gold crossed $900 an ounce. It even went up to $1,000 at some point.
Chinese investors launched the first gold-futures contract on January 9, 2008. These types of agreements are for the purchasing or selling items at an agreed-upon price in the future. The most active futures agreement signed in June soared 6.3%. However, it fell to 3.7% on the very next day. Therefore, this new gold-futures contract will be interesting to watch unfold.
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A number of other new investments are being considered in markets from Dubai to Mumbai. The State Bank of India plans to launch an exchange-trade fund that is focused on gold. It will enable investors to trade gold, just like a regular stock. More and more trade options are becoming available to investors.
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Many people are jumping on board the gold train. A London-based gold-mining industry group, The World Gold Council, is intending on signing its first gold ETF in Dubai this year.
Since last August, Japan has already taken an interest in gold-linked bonds aimed at smaller investors. More recently, the last few days, Hong Kong Exchanges & Clearing Ltd. stated it plans to list gold-related investment products and ETFs on their Hong Kong Stocks Exchange.
China has now become the world’s number one producer of gold. For the first time in more than a century, South Africa has been pushed to second place. China has recognized the trade options of gold, and the profit to be made by adding it to their trading portfolio.
There has been a 31% increase in the price of bullion on the Comex division of the New York Mercantile Exchange due to the fact that investor’s world-wide, last year, put billions of dollars into gold investments. Earlier this week, the Comex was able to keep gold above $900 due to anticipation of the Chinese participation in gold investment. However, since then Comex had to put it down to $880.80.
People in India and other Asian countries have begun to stockpile gold jewelry and bars. In China, gold has been a popular savings tool.
This new type of investment has brought out new types of crimes. People are coming up with new scams to swindle investors. Some of these scams include selling gold -plated silver bullion and spreading gold dust on stones and pretended they were straight from the mine. The largest scam, so far, was where a Shanghai trading firm, Liantai Gold Products Co., traded gold-futures contracts overseas and lost millions of dollars of its clients’ money. The total trading volume has reached $1.64 billion, and the case is still pending.
In the past, the buying of selling of gold in China required lugging the metal between brokers. In 2002, investors in China were given the ability to trade physical gold on the Shanghai Gold Exchange. However, people were not able to invest in actual bullion until 2005. Now, in 2008, new products can be trading options online, just like stocks. And best of all, stock option trading investors can benefit from this online trading news, as there are multiple ways to trade gold with options. For example, the following covered call investing positions were found using for companies in the gold industry using PowerOptions powerful covered call search tool:
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| Stock Sym |
Stock Price |
Option Sym |
Expire &Strike |
Opt Bid |
%Dnsd. Prot |
%If Unch. |
%If Asgnd. |
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| GG | 35.55 (+1.07) | GGBG | 08 FEB 35.0 (25) | 2.6 | 7.3 | 6.2 | 6.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ABX | 48.36 (+1.63) | ABXBT | 08 FEB 47.5 (25) | 3.5 | 7.2 | 5.9 | 5.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ABX | 48.36 (+1.63) | ABXBJ | 08 FEB 50.0 (25) | 2.35 | 4.9 | 5.1 | 8.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| KGC | 21.08 (+0.68) | KGCBD | 08 FEB 20.0 (25) | 2.05 | 9.7 | 5.1 | 5.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NEM | 53.48 (+0.60) | NEMBX | 08 FEB 52.5 (25) | 3.5 | 6.5 | 5 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NEM | 53.48 (+0.60) | NEMBK | 08 FEB 55.0 (25) | 2.35 | 4.4 | 4.6 | 7.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GG | 35.55 (+1.07) | GGBU | 08 FEB 37.5 (25) | 1.55 | 4.4 | 4.6 | 10.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| KGC | 21.08 (+0.68) | KGCBX | 08 FEB 22.5 (25) | 0.9 | 4.3 | 4.5 | 11.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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[tags] China, Middle East, Dubai, Mumbai, World Gold Council, ETF, Hong Kong Exchanges & Clearing, Hong Kong Stocks Exchange, South Africa, New York Mercantile Exchange, Comex, Asian, covered call investing, investment strategy, poweroptions, stock option trading [/tags]