Futures - Exchange Traded Market

A precious metals 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 standardized with regards to the quantity, quality, time and place of delivery. The only negotiable variable in a specific futures contract is price.

This provides customers with a risk management tool to protect the price of their expected purchase or sale of physical metals (eg, using Futures contract to hedge your long asset position in a bear market). It also provides other types of 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 great majority of futures contracts are offset prior to the delivery period, with the market participant taking a position opposite to their initial position. Eg. If you initiate a Feb 2007 contract either long or short, you must square off your position one month before end of Feb 2007, ie. by the end of Jan 2007.

Financial leverage, transparency and flexibility are the few advantages of trading exchange traded futures contracts in precious metals. With a simple point and click execution through POEMS, you receive near instantaneous trade execution. Also, the entire 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 its expiration, the Exchange For Physicals (EFP) price between the futures price & the spot price will be narrowed.

Illustrations for Exchange For Physicals (EFP)

One Feb 2007 Gold futures contract on 06 Nov 2006 will be priced at US$635.00 when Spot Gold is trading at US$ 628 on the offer.
Comes 3 months later, on 31 Jan 2007, the Futures price of the Feb 2007 Gold futures contract will be priced closer to the current Spot price on 31 Jan 2007. ie. Feb 2007 contract is priced @ US$650.00 while the spot price is US$649.00.

With Phillip Futures, customer can have access to trading futures contracts available in Commodity Exchange Incorporated, Chicago Board Of Trade and Tokyo Commodity Exchange. With full- and mini-sized contracts available, you can choose the product size that best meets your needs.

Below is a list of contracts available in all the exchanges:-

For Your Precious Metals Investment Needs, Please Contact Our Precious Metals Specialists At:

Tel          :               (65) 6536 7113
Fax         :               (65) 6538 2190

Email      :               bullion@phillip.com.sg