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

Commodity exchange is a place where various commodities and derivative products are traded.

Commodity index provides traders an opportunity get exposed to a basket of commodities, measuring their performance.

Commodity traders arrive at diversification of their market exposure by creating portfolios that potentially reduces risk or provide a hedging platform

Traders use commodity swap to hedge against price fluctuations in commodity prices, commonly energy and agriculture commodities

Confidence is a key ingredient in life and in business. It is also crucial thing for the economy as a whole. Remember the Great Recession? It was so severe partly because banks ceased to trust each other. The level of consumer confidence is very important economic indicator, as well. It measures the degree of optimism that consumers fell about the state of the economy.

People are emotional beings and herd animals at the same time, so sentiment is a key factor in many markets. In particular, sentiment is an important driver for the gold prices, as the yellow metal does not bear any yield and its industrial use is limited. So it is difficult, if not impossible, to calculate the bullion’s fundamental value – and this is why the sentiment is so important in the precious metals market.

Traders, especially arbitrageurs, make use of contango when it widens or narrows from normal values. Gold contango creates arbitrage opportunities in this particular metal.

The definition of a conversion rate is highly dependent upon the context in which it is being discussed, but in the broadest sense, a conversion rate is the ratio of one input measured against a desired set of results or outcomes.

The butterfly effect describes the situation when the flapping of the wings of a butterfly causes (or influences at least) a tornado several weeks later in a completely different location. But after 2020, the better name could be perhaps “the bat effect” – somebody ate a bat in Wuhan and several weeks later the whole world started to suffer from the coronavirus. But don’t worry, the coronavirus won’t last long – it’s made in China!

Many investors focus on public debt. But investors should not overlook private debt. In a way, high private debt is even more dangerous. Just think about the global financial crisis which was partially caused by excessive mortgaging accompanied by offloading such securities into CDOs sold to unsuspecting investors.

A temporary reverse movement, usually negative, of precious metals, stocks, bonds or indices. Corrections are generally short-lived price declines on low volume, marking a transitory pause in an uptrend or downtrend in a market. In contrast to bear (or a bull) markets, corrections are relatively shallow and temporary. So, if gold is in an uptrend, then a gold correction means a temporary downswing that is followed by an even bigger rally.

Is a statistical method using a number that describes the degree of a linear relationship between two assets that either move together, or inversely, or are not related at all. The correlation coefficient is a way to measure the strength of the relationship between two assets, useful because analysis of one market can sometimes help us infer things about the other market. We use the correlation phenomenon in our analyses and alerts.