Canadia Gold & Trust Co, one of Phnom Penh's more dynamic Sino-Khmer banks, has
installed Reuter's "Commodities 2000", a data network that provides fast
updates of Futures, Options and spot prices for gold and foreign exchange. Short-term
investors and speculators can now play London for the first time.
A large computer screen in the main banking hall will soon relay up-to-date information
to customers on gold quotations from the world's major trading centers.
Previously, those wanting to speculate could only do so at Phnom Penh's Olympic Market.
A somewhat thin high-risk market dealing in 1kg bars at a minimum, with no deposit
required and where a small number of gold dealers could manipulate prices to their
advantage. Canadia's new service cuts out the arbitrary price risk and gives an above
board service.
First, a warning. Forward Markets and, especially, Options, are a recognized way
of winning a sizable amount of money or losing your shirt.
For the moment, the Canadia Bank is offering a "Loco-London Spot" service
only. This allows a speculator to take a position on a future price movement on the
London market.
For example, suppose a speculator expects a price change in the near future to be
above what it is today. The person would then speculate by either buying at the Spot
rate and then, after one period, selling at a higher price (or vice versa), thereby
making a profit.
A couple of examples to see how it all works in practice. First, betting on a
rise in prices:
- Nov. 20: Spot gold price = $360/oz
Minimum contract 100ozs bought for $36,000
Required 10 percent margin deposit: $3,600
Commission per contract: $30
Cost of playing market: $3,630.
Nov. 21: Spot gold = $370/oz
Minimum contract 100ozs now sold for $37,000
Profit ($37,000 - 36,000) = $1,000
Less buying & selling commission ($30 x 2) $60
Less interest (36,000 - 3,600) x 5 percent x 2 day, dividing 100 x 360 : $9
Net Gain $ 931
A return of 25.6 percent on initial outlay after only two days.
One can also speculate on a price decline. Or by going "short", another
way of saying one does not have the gold in the first place but one hopes to redress
the situation later, viz.
Nov. 20: Spot gold price $360/oz.
Minimum contract 100 ozs sold for $35,000, 10% margin deposit: $3,600
Commission per contract: $30
Total cost: $3,630
Nov. 21: Spot gold price $350/oz
Minimum contract 100 ozs bought for $35,000
Profit (36,000 - 35,000) = $1,000
Less selling & buying commission (30 x 2) $60
Net Gain $940
A return of 25.9 percent on initial outlay, again within two days.
Thus, whether one is a "Bull" (i.e. expecting a price rise), or a "Bear"
(selling in anticipation of a fall), one can make a large percentage return on a
small outlay .
Contact PhnomPenh Post for full article
Post Media Co LtdThe Elements Condominium, Level 7
Hun Sen Boulevard
Phum Tuol Roka III
Sangkat Chak Angre Krom, Khan Meanchey
12353 Phnom Penh
Cambodia
Telegram: 092 555 741
Email: [email protected]