Do you know exactly what a gold future is? It can be basically an arrangement to trade gold at some day down the road. However even though the actual trade occurs in the future, the prices and level of the trade are set now - that's where gold futures prices come into play.
In short, you, because the buyer, will not paying for the gold at this time (not completely anyway, you will need to pay a first deposit) and the seller whom you're buying from will never have to deliver yet either. The trade itself will complete at the future date that you simply both decided on.
But gold futures prices aren't pretty much what you consent to pay on. Just now we mentioned a 'deposit' which you might have to pay - this also is called a 'margin'.
A margin is really a component of gold futures prices which is present in every gold future trad e. Simply because trades take place in the future, there is a temptation on both the part of the buyer and the seller to walk away from the deal if everything doesn't go their way.
By way of example, if you as being a buyer decided on gold futures prices but then the actual price of gold began to drop, you'd end up actually paying more than the market value of gold if the time relates to complete the sale. In short - you will be losing money.
0
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment