With Phillip Futures, customers can venture into the world of precious metals with ease and accessibility. We offer different precious metals products for customers to meet their unique investment objectives and trading needs. Precious metals can be used as both a trading vehicle and a wealth management tool.
Why Trade Precious Metals:
Gold
Gold has been a symbol of power and wealth and a store of value since the beginning of time. Virtually indestructible, Gold is an asset class that is durable & highly liquid. Given its low correlation with other asset classes, Gold often serves as the most optimum potential safe haven from uncertainties of economic events, political unrest and high inflation. Investment into gold offers investors an attractive opportunity to diversify their portfolio potentially reducing overall portfolio risk and ultimately, portfolio wealth.
Silver
Silver’s value as a precious metal of choice was long considered only second to Gold. Silver is a luxury item purchased by customers for its uses in jewelry and silverware. A hybrid between an industrial and precious metal, Silver is also used in the manufacturing of products and silver consumption has outpaced new production in recent years. This situation probably cannot persist forever without demand for Silver falling or production supplies and prices rising.
Platinum
Platinum, the noble metal, is the most popular of six metals collectively known as the platinum group metals (PGMs). The others include palladium, rhodium, ruthenium, iridium and osmium. Platinum is used in a wide range of applications; the major use currently is as auto catalysts and as a catalyst in the refining of crude oil into its constituent products. It is thus important for its related industries to hedge against the potential rise in Platinum prices.
Palladium
Palladium, the sister metal of Platinum, is used along side many applications with Platinum. The largest use of Palladium today is in catalytic converters. Much research is in the progress to discover ways to replace the much more expensive Platinum with Palladium in this application. Palladium is one of the two metals which can be alloyed with Gold to produce white gold as jewelry. Palladium is also being used in electronic connectors and semiconductors.
Products Available
Trading precious metals has never been easier with electronic trading. With our electronic trading platform – POEMS, POEMS PROFESSIONAL AND P-TRADER, customers can easily establish both long (buy) or short (sell) in the precious metals market anywhere and anytime when the needs arise.
Phillip Futures Pte Ltd offers online futures trading in Gold, Silver, Platinum, and Palladium. You may trade precious metals futures contracts around-the-clock in the following ways:-
- Spot Loco London contracts in over-the-counter (OTC) market
- Futures - Exchange Traded contracts in COMEX, CBOT, TOCOM
So what are differences between trading in Spot market or Futures market and which one do you choose? This all depends on your investment objectives and timeframes.
What Precious Metals Contracts are available for trading?
Spot OTC market
The most important OTC markets for gold and silver are the "Loco London" markets in which the two metals are traded for delivery in London. These markets operate under the auspices of the London Bullion Market Association (LBMA), but are not exchanges. Loco London trading was originally the preserve of London bullion houses alone, but today Loco London gold and silver are freely traded by dealers in many other centres.
Why Trade Spot OTC Bullion
- Prices are typically quoted and traded against the US dollar;
- The Loco London Market can serve various trading purposes such as hedging, investment and speculation;
- In the OTC market, investors may hold their positions as long as they like as there are no expiration dates;
- Receive interest when you sell Loco-London Gold or Silver (depends on current interest rates, please refer to table below);
- Leverage* trading on margin;
- Mini-sized contracts available for new traders or those with lower risk appetite;
- Diversification of investment portfolio
* In leveraged trading, the investor may sustain losses in excess of his initial funds and may be called upon to deposit additional funds at short notice.
How to Trade
Loco-London Gold are quoted and traded in minimum price multiples of US$0.05 a troy ounce. Each US$0.05 price move is equivalent to US$5 per 100 oz contract. So if an investor bought 1 lot of Loco London gold at US$907.00 and sold it later at US$917.00, the result = US$917.00 - US$907.00 = US$10.00 x 100 oz = profit of US$1,000.00.
When trading, the buyer and seller only need to place a fraction of less than 10% of the contract value as margin deposit instead of paying the full value of the contract traded. As the full value of the contract transacted is not exchanged between the buyer and seller, the buyer therefore will be debited daily interest charges on the value of the contract while the seller will be credited daily interest earnings.
This interest adjustment is necessary as there is usually a differential between the gold lease rate (lower) and the US$ interest rate (higher). Interest on the Spot Gold/ Silver contracts is calculated based on the prevailing interest rate of Spot Gold/ Silver in the market, the daily settlement price of your Spot Gold/Silver overnight position. The interest will be charged on a daily basis.
Formula to calculate the daily bullion interest charge for overnight open position:
Daily settlement price X contract size X interest rate of Spot Gold/Silver* / 360 days
* = interest rate of spot gold as per table below
Currently the bullion interests (w.e.f. 16 March 2010) per annum are as follows:
| Contracts | Short | Long |
|---|---|---|
| Spot Loco London Gold (100 oz) | +0%* | -2.5%* |
| Spot Mini Gold (1 kg or 32.148 oz) | ||
| 5000 oz Silver | +0%* | -3.0%* |
| 1000 oz Silver |
Contact Us
Bullion Desk
Tel: (65) 6536 7200
Fax: (65) 6536 7367
Futures--Exchange Traded Bullion Markets
A precious metal futures contract is a legally binding agreement to buy or sell Gold, Silver, Platinum and Palladium in the future at a price agreed upon in the current time period. Futures contracts are standardised with regards to the quantity, quality, time and place of delivery. The only negotiable variable in a specific futures contract is the price.
This provides customers with a risk management tool to protect the price of their expected purchase or sale of physical metals (for example, using Futures contracts to hedge against your long asset position in a bearish market). It also provides other customers with the opportunity to participate in the precious metals market without a position in the physical metals markets.
Although futures contracts are obligations for the delivery of the physical commodity, the majority of futures contracts are offset prior to the delivery period. If you buy or sell a Feb 2009 contract, you must square off your position one month before end of Feb 2009 i.e. by the end of Jan 2009.
Why Trade Bullion Futures
- Price transparency and flexibility;
- Market depth is available for all customers with transparency for all the bids, offers and quantities in the market;
- No bullion interest is payable in Futures contracts as the cost of carry has already been factored into the futures price. (However, when the contracts are nearing expiration, the Exchange For Physicals (EFP) price between the futures price & the spot price will be narrowed);
- Leverage* trading on margin;
- Mini-sized contracts available for new traders or those with lower risk appetite;
- Diversification of investment portfolio
In leveraged trading, the investor may sustain losses in excess of his initial funds and may be called upon to deposit additional funds at short notice.
