Gold futures risky but necessary for Thailand's abundant gold shops
By Jon Fernquest
Gold
shops have to keep a steady supply of gold flowing to their customers
even when global gold supplies are low and prices high. In order to do this gold shops have to use gold futures to hedge and lock in prices.
Today's article begins after the vocabulary.
futures
- a contract to buy something in the future, a contract
that is traded on a public exchange, so the price reflects current
expectations about what the price of the asset will be in the
future (See Economist
Glossary on derivatives) การซื้อขายล่วงหน้า
gold futures - a contract to buy gold in the future that is traded on an exchange
gold - the world's most famous precious metal, used for money and a store of value for thousands of years (See Wikipedia on Gold and Gold as an Investment)
abundant - large amounts of something (not hard to find, no scarcity)
risky - dangerous, possibility of loss or harm
lock in - take action to keep something from changing
hedging - protect from losing money if the value of shares, currencies or raw materials changes, by using derivatives such as futures or options, another way of looking at it: reduce risk by purchasing other offsetting risks (securities with prices that move in the opposite direction, for example) (Sees The Economist glossary)
gold futures - a contract to buy gold in the future that is traded on an exchange
gold - the world's most famous precious metal, used for money and a store of value for thousands of years (See Wikipedia on Gold and Gold as an Investment)
abundant - large amounts of something (not hard to find, no scarcity)
risky - dangerous, possibility of loss or harm
lock in - take action to keep something from changing
hedging - protect from losing money if the value of shares, currencies or raw materials changes, by using derivatives such as futures or options, another way of looking at it: reduce risk by purchasing other offsetting risks (securities with prices that move in the opposite direction, for example) (Sees The Economist glossary)
Economics
MTS warns about gold futures
Retail investors may risk huge losses6/07/2010
Nuntawun Polkuamdee
More than half of all retail gold investors post losses on their investments, a figure that points to the risks and complexity of derivatives, says the MTS Gold Group.
Gold shops have to continually improve and develop, otherwise they will lose out from high competition,’’ says Dr Kritcharat
retail
- to sell directly to the public for their own use ขายปลีก
retail investors - investments made by people directly, not through institutional investors (See below)
institutional investors - the largest investors in financial markets, companies which have large investments as part of their business, including pension funds, fund-management companies, insurance companies, investment banks, hedge funds, and charitable endowment trusts (See The Economist glossary)
risk - danger, how likely or possible it is for a bad event that causes harm and damage ความเสี่ยง
post losses - lose money (and record it in financial statements)
figure - an amount of money จำนวนเงิน
complexity - difficult to understand and deal with because it has many parts, processes or aspects
derivatives - futures, options, swaps, etc (a financial asset that "derives" it value from other financial assets such as stocks, bonds, commodities, interest rates, exchange rates, and stock price indices; See Economist Glossary and Wikipedia) อนุภัณฑ์
improve - to get better ดีขึ้น
retail investors - investments made by people directly, not through institutional investors (See below)
institutional investors - the largest investors in financial markets, companies which have large investments as part of their business, including pension funds, fund-management companies, insurance companies, investment banks, hedge funds, and charitable endowment trusts (See The Economist glossary)
risk - danger, how likely or possible it is for a bad event that causes harm and damage ความเสี่ยง
post losses - lose money (and record it in financial statements)
figure - an amount of money จำนวนเงิน
complexity - difficult to understand and deal with because it has many parts, processes or aspects
derivatives - futures, options, swaps, etc (a financial asset that "derives" it value from other financial assets such as stocks, bonds, commodities, interest rates, exchange rates, and stock price indices; See Economist Glossary and Wikipedia) อนุภัณฑ์
improve - to get better ดีขึ้น
Trade in gold futures have increased steadily since their introduction by the Thailand Futures Exchange early last year, as prices for the precious metal have jumped sharply as a hedge against inflation and worries about the stability of the US dollar and the euro.
Next month, the TFEX plans to launch a new, 10 baht-weight gold futures contract, one that will have one-fifth of the initial investment cost if compared with existing 50 baht-weight futures.
precious
- of great value because of being rare, expensive or important
มีค่า,ล้ำค่า
precious metal - the rare, valuable and non-radioactive metals gold, silver, platinum and palladium (See Wikipedia)
radioactive - a substance that gives off dangerous life-threatening radiation, emit radiant energy by spontaneously emitting alpha, beta, or gamma particles (See Wikipedia)
hedge - take action to protect from harm (by purchasing a risk in the opposite direction that offsets the risk that you have)
inflation - the level of prices rising in the economy as a whole (See The Economist glossary) ภาวะเงินเฟ้อ, อัตราเงินเฟ้อ
stability - does not move suddenly by large amounts (in an unpredictable and surprising way) ความมีเสถียรภาพ ความมั่นคง
launch - to start something เปิดโครงการ, เริ่มต้น, เริ่มทำ
weight - importance ความสำคัญ
contract - a formal agreement, usually written
initial - early; first ในเบื้องต้น
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
precious metal - the rare, valuable and non-radioactive metals gold, silver, platinum and palladium (See Wikipedia)
radioactive - a substance that gives off dangerous life-threatening radiation, emit radiant energy by spontaneously emitting alpha, beta, or gamma particles (See Wikipedia)
hedge - take action to protect from harm (by purchasing a risk in the opposite direction that offsets the risk that you have)
inflation - the level of prices rising in the economy as a whole (See The Economist glossary) ภาวะเงินเฟ้อ, อัตราเงินเฟ้อ
stability - does not move suddenly by large amounts (in an unpredictable and surprising way) ความมีเสถียรภาพ ความมั่นคง
launch - to start something เปิดโครงการ, เริ่มต้น, เริ่มทำ
weight - importance ความสำคัญ
contract - a formal agreement, usually written
initial - early; first ในเบื้องต้น
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
Given the current troubles encountered by retail investors with the larger contracts, MTS is concerned that the smaller 10 baht-weight (151.6 grammes) contracts could catch even more people off-guard unless they adequately understand the mechanics of the gold market and derivatives trading.
MTS yesterday announced the launch of its MTS Academy, an institution to educate investors about the gold market and futures trading.
Kritcharat Hirunyasiri, the managing director of MTS Gold Group, said the company projected sales of as much as 150 billion baht this year, following sales of 88 billion in the first half. The group posted sales of 130 billion baht last year, up sharply from 46 billion the year before
current
- of the present time ปัจจุบัน
encountered - experienced, especially something unpleasant เผชิญหน้า
contracts - grows smaller, shrinks
concerned - worried about something มีความกังวล
institution, educational institution - a school
projected - the amount that experts believe (forecast) for the future
encountered - experienced, especially something unpleasant เผชิญหน้า
contracts - grows smaller, shrinks
concerned - worried about something มีความกังวล
institution, educational institution - a school
projected - the amount that experts believe (forecast) for the future
The company exported some 88 billion baht in gold in the year to May, against imports of 50-60 billion. Last year, exports totalled 190 billion baht with imports of 120 billion.
For futures trade, MTS holds a market share of 14% to 15% of total gold futures trade on the TFEX.
Dr Kritcharat said the company is confident of maintaining its position as the No. 1 or No. 2 trader in both gold bullion and futures this year.
He said futures trade was expected to jump three-to-four times to 12,000 contracts per day with the launch of the 10 baht-weight contracts, with trading value rising to reach 4-5 billion baht per day from 3-4 billion now.
trade
- the buying and selling of goods การค้าขาย
market share - the percentage of customers in a market that a company has
TFEX - Thailand Futures Exchange, a subsidiary of the Stock Exchange of Thailand (See website)
confident - being certain of your abilities or of having trust in people, plans, or the future มั่นใจ
expected - believe will happen คาดว่า (จะเกิดขึ้น)
market share - the percentage of customers in a market that a company has
TFEX - Thailand Futures Exchange, a subsidiary of the Stock Exchange of Thailand (See website)
confident - being certain of your abilities or of having trust in people, plans, or the future มั่นใจ
expected - believe will happen คาดว่า (จะเกิดขึ้น)
Dr Kritcharat recommended investors should set aside at least 100,000 baht to trade 50 baht-weight contracts and 25,000 for the mini-gold contracts, a margin significantly higher than the minimum requirements of 57,000 and 12,500 baht respectively.
MTS has 1,200 gold futures accounts and expect to get another 500 accounts after mini-gold contracts start trading.
Dr Kritcharat said MTS had invested more than 13 million baht in its futures trading platform and more than 10 million for bullion trading to help investors
mini
- small
margin - the amount by which a competition or election is won
significantly - in an important way อย่างสำคัญ
account - an arrangement for keeping money at a bank or investment company
platform, computing platform - a combination of software and hardware used to run a computer system, for example a computer gaming platform, a mobile phone platform, an operating system platform or software platform (See Wikipedia)
futures trading platform - computer software and hardware for trading gold futures
margin - the amount by which a competition or election is won
significantly - in an important way อย่างสำคัญ
account - an arrangement for keeping money at a bank or investment company
platform, computing platform - a combination of software and hardware used to run a computer system, for example a computer gaming platform, a mobile phone platform, an operating system platform or software platform (See Wikipedia)
futures trading platform - computer software and hardware for trading gold futures
The firm supports trade through telephone orders, online and mobile applications, and also offers a range of delivery and deposit services.
''Gold shops have to continually improve and develop, otherwise they will lose out from high competition,'' said Dr Kritcharat.
MTS now has four branches and 18 selling agents nationwide _ the company plans to introduce 10 new agents this year.
firm
- a business or company บริษัม
supports - helps
online - connected to the internet
range - a number of different things that are of the same general type ขอบข่าย, ประเภท
deposit - money kept in a bank by a person or company เงินฝาก
nationwide - including the whole country ทั่วประเทศ
supports - helps
online - connected to the internet
range - a number of different things that are of the same general type ขอบข่าย, ประเภท
deposit - money kept in a bank by a person or company เงินฝาก
nationwide - including the whole country ทั่วประเทศ
''Gold investors should look to have both bullion and futures trading ac counts, to help support hedging strategies and reduce risk,'' Dr Kritcharat said
''What is most important is how and when to stop your losses.''
The MTS Academy, located at the Offices @ CentralWorld, will offer basic courses for free. Intermediate and advanced trading requires investors to open a free trading account with the firm
Dr Kritcharat said gold, which has risen by some 10% for the year to date, could reach $1,310 per ounce by the year-end.
Gold prices in Hong Kong closed yesterday unchanged at $1,211-$1,212 per ounce
support
- help, by giving money, for example สนับสนุน
strategies - long-term plans for success in competition กลยุทธ
trading account - an arrangement to keep money with a bank or investment company for the purposes of trading something like stock shares, futures, bonds...
strategies - long-term plans for success in competition กลยุทธ
trading account - an arrangement to keep money with a bank or investment company for the purposes of trading something like stock shares, futures, bonds...
(Source: Bangkok Post, Economics, MTS warns about gold futures, Retail investors may risk huge losses, 6/07/2010, Nuntawun Polkuamdee, link)
