Precious Metals are rare, highly tradable commodities, with a high economic value. These metals are often seen as safe haven investments during times of economic or political uncertainty and turmoil. As such they provide an alternative to investing in other more traditional financial instruments. Gold and silver are two of the most recognised of these commodities and both have a high investment value, due to their relative rarity and multiple sources of demand.
Precious Metals Contract Specifications Details
The typical spread for gold and silver are as listed:
|Gold and Silver||Spreads|
* The above spreads are applicable under normal trading conditions
The Precious Metals market is open 23 hours a day on weekdays and is closed over the weekend. You will not be able to place any trades, stops or limits when the market is closed.
|Server Time (GMT+3):||Open from Monday 00:00 | Close on Saturday 00:00|
*Server Time is subject to Daylight Saving Time (DST), which begins on the last Sunday of March and ends on the last Sunday of October. Server Times: Winter: GMT+2, Summer: GMT+3 (DST).
Lot Size Specification
- One lot of Gold: 100 ounces
- One lot of Silver: 5,000 ounces
- Minimum required lot is 1 Micro lot, 0.01 lot.
- Transactions above the minimum size can be in fractions of a contract.
Transactions above the minimum size can be in fractions of a contract.
- The minimum size: 0.01 of one contract, the equivalent of 1 ounce of gold, 50 ounce of silver.
- The maximum size: 50 lots depending on market availability but this may be subjected to slippage.
Precious Metals Pricing
Prices for gold and silver are quoted in USD. If you are trading 1 lot of gold, one cent movement is equivalent to USD 1. Please see examples:
- Gold: Opening price is 1700.10 and the price moves up to 1700.11. The profit value is USD 1.
- Silver: Opening price is 34.70 and the price moves up to 34.71. The profit value is USD 50.
Leverage allows you to hold a larger positions than your initial cash deposit would otherwise allow. Your deposit is multiplied or leveraged by your broker to increase the value of your underlying investment. The higher the level of leverage applied,then the larger the position a trader can hold open, for the same size of initial deposit.
For example,a client using leverage or gearing of 100:1 could control a position in the forex market of $100,000 with a margin requirement of just $1,000. If they use a leverage ratio of 200:1, then the client would only need an initial $500 to open this position.
Leverage or gearing can raise the potential for high returns when the market moves in your favour. However, you should note that leverage will act against you if and when the market moves in the opposite direction to your prediction.
The default leverage level is set at 1:50, however, clients can request a higher leverage of up to 1:400. Higher leverage levels are subject to approval based on the results of the internal appropriateness test.
When an investor opens an account with a broker, an initial deposit is required in order to open a position in the market. The required cash deposit will act as a deposit to cover any credit risk. Depending on the agreement, the investor could be able to leverage up to a certain limit.
The margin requirement for a metal trade is calculated by using the following formula:
Margin = (Lot Size * Contract Size * Opening Price) / Leverage
Examples below based on a Standard /Classic account 1:100.
|Forex||Margin requirement for one standard contract position in EUR/USD at 1.2500 is calculated as follows:
Margin = (1 * 100,000 * $1.2500) / (100) = $1250.00
|Spot Gold||Margin requirement of one standard contract position in Gold at 1579.01 is calculated as follows:
Margin = (1 * 100 * $1579.01) / (100) = $1579.01
|Spot Silver||Margin requirement for one standard contract position in Silver at 28.70 is calculated as follows:
Margin = (1 * 5000 * $28.70) / (100) = $1435.00
Note: Interest is not required to be paid on the borrowed amount, but if the investor decides to hold his position overnight, interest will be charged as the rolled over rates on the total positions held.
A Margin Call is a level nominated by a brokerage that sets out the minimum amount of money required to trade in the market. If your account falls below the margin call level, you will need to make a further deposit in order to maintain your open positions. Or should you prefer you can close some of your outstanding positions to reduce your margin requirement. At Blackwell Global, the Margin Call level is set at 120%.
Stop Out Level
In the event that you are unable to maintain sufficient funds in your account after reaching the Margin Call level, and if the value of your account subsequently depreciates to the Stop Out level, your positions will be closed automatically, in order to prevent further losses to your capital. At Blackwell Global, Stop Out level is set at 80%.
Often referred to as Rollover Interest, swaps are charged when a client holds onto a position overnight . They are due to differentials in interest rates between the base metal and the quote currency.
Blackwell Global undertakes precious metal trading on a “spot” basis. All trades are settled two business days from their inception as per market convention. Swaps are calculated automatically and are applied at 21:59 GMT (Server Time 22:59) on a daily basis. Please note Blackwell Global does not arrange for physical delivery.
Any open positions held from Wednesday to Thursday on a trade date basis are charged three times the rollover Interest . These extra payments are to cover the interest that would normally have been charged at the weekend (Saturday and Sunday) when the underlying market is closed.
|Pair||Long Rate (Pips)||Short Rate (Pips)|