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

Non-Commercials Traders (large speculators) is a category of traders specified in the Commitments of Traders Report (CoT report) which represents investors who are usually not involved in the production, processing or merchandising of gold.

What is the favorite roll of the Sushi Chef? Payroll!

The nonfarm payroll employment represents the total number of paid U.S. workers, excluding proprietors, private household employees, unpaid volunteers, farm workers, and the unincorporated self-employed. This measure accounts for approximately 80 percent of the workers who contribute to the GDP. Thus, the analysts see it as a very insightful statistic, which can be used to determine the condition of the labor market. Since the nonfarm payrolls are considered to show the current state of economic activity, the National Bureau of Economic Research analyzes it to determine whether the economy is expanding or contracting. Nonfarm payrolls are also closely watched by the Fed, as they show whether and how quick the economy and inflationary pressure are growing (central bankers consider fast rates of job gains as potentially leading to an increase in inflation). The nonfarm payroll statistic is released monthly, on the first Friday of the month, by the U.S. Bureau of Labor Statistics as part of the Employment Situation Report on the state of the labor market.

Non-Reportables (small speculators) is a category of traders specified in the Commitments of Traders Report (CoT report) which represent small investors who hold position in futures that are below the reporting level specified by the Commodity Futures Trading Commission (CFTC). Since this catch-all category consists of individual speculators, it does not affect the gold market significantly (it controls a relatively small part of open interest, so it has a relatively weak position in the market).

Normal distribution is the most popular way of describing random events. Some believe that asset prices move more or less randomly, so they use the normal distribution to make detailed estimations of future prices and risk.

North Korea, officially known as the Democratic People’s Republic of Korea (DPRK), is a country located in East Asia, in the northern half of the Korean Peninsula. In 1910-1945, Korea was a Japanese colony. After the surrender of Japan at the end of World War II, Korea was divided into two zones: the south was controlled by the Americans, while the north was occupied by the Soviets. The reunification talks failed and two separate governments were created in 1948: the capitalist Republic of Korea in the South and the communist Democratic People’s Republic of Korea in the North. Soon, the Korean War broke out, as the North invaded the South. The Soviet Union supported North Korea, while the U.S. supported South Korea. The military conflict lasted from 1950 to 1953, when the ceasefire was negotiated. However, South Korea and North Korea are still officially at war – and the U.S. continuously keeps troops in South Korea.

Numismatic gold coins typically have a higher value for collectors than the face value on the gold coin or the value of the metal content due to the coin's rarity or its age. Their usefulness to gold investors is usually limited and the same goes for silver numismatics.

The New York Mercantile Exchange (Nymex) is a commodity futures exchange owned and operated by CME Group Inc., the largest derivatives marketplace in the world. Nymex was founded in 1872 and it is located in Manhattan, New York. It is the world’s largest physical commodity futures exchange, with mostly electronic trading since 2006. In 1994 it merged with the Commodity Exchange Inc. (Comex) under the Nymex name. Since then, Comex is officially Nymex’s division responsible for metals trading. Nymex specializes in energy carriers and some metals.

Open interest is the total number of outstanding futures contracts/options at the end of each trading day held by the market participants. It is calculated by counting the totals from either buyers or sellers (both are not added together) for any given market.

The opportunity cost is the cost of the best alternative that must be forgone in order to pursue a certain action. To simplify, it is what you have to give up to get something. For example, the opportunity cost of going to college is the money you would have earned if you had worked instead. Or if you spend the time going to a movie, you cannot spend that time at home reading a book, which is the opportunity cost of going to a movie. Similarly, the opportunity cost of an asset is what you give up by owning it. For example, the opportunity cost of investing in stocks is the yield on risk-free government bonds. Each investment decision entails some opportunity costs and gold is no different here.

Optimization is a term used in mathematics, computer science and economics. It refers to choosing the best available solution from a set of alternatives (variables). Optimization requires solving problems dealing with the maximization or minimization of a real function by taking into account all variables.

Options’ and Futures’ D-Day.

Expiration Date is the date on which the futures or options contract expires. The option holder can elect to either exercise the option or allow it to expire worthless. The owner of the futures contract must settle accounts with the other party on the expiration date to either pay or receive the difference between the agreed upon strike price and the actual market price of the underlying asset.

"If something rallies, options may rally many times more but the price for this leverage is that you have to be right on time."