Singh, Saurabh and Saharawat, Swati (2011): Hedging dynamics with gold futures. Published in: Pantnagar Journal of Research , Vol. 10, No. 1 (2012): pp. 71-77.
Download (1MB) | Preview
People by and large tend to postpone their present consumption for numerous reasons. This postponement of consumption leaves them with surplus money to invest for future consumption. Amongst the number of alternatives avenues present for such investments, gold too tends to be one of them. People around the world invest in gold though for many different reasons. Many people view gold as a reliable source of value in times of difficulty. Gold offers insurance against stock market failure. While at the same amongst the different purposes that require use of Gold, certainly include commodity uses. Even if viewed from the historical perspective of a multi-century time frame, no other investment has the wealth preserving power of gold. Other assets are dependent upon a certain government or political climate to retain value or appreciate, but gold is largely independent of political climate. The research design adopted for the completion of the study was of descriptive type. It describes the reasons that affect the prices of gold in world as well as domestic scenarios. The study leads to the conclusion that by keeping an eye on movement of ‘Basis and of market the importers and exporters’ can manage the four scenarios for both long/short hedgers. The hedger can do two things for minimizing the risk namely first being either can square off the position at the time where he can face minimum risk or can gain profit as bonus if he has no margin left in respect of time i.e. if he has to buy or sell the gold for fulfilling the commitments on or before the expiry date of his future contract only, or the next can be rolling over the position, if there is still some time in fulfilling the commitments i.e. can buy/sell another far month contract for minimizing the risk, according to the movement of Basis and market.
|Item Type:||MPRA Paper|
|Original Title:||Hedging dynamics with gold futures|
|English Title:||Hedging dynamics with gold futures|
|Keywords:||Futures, Hedging, Risk Management, Commodity Exchanges|
|Subjects:||G - Financial Economics > G1 - General Financial Markets > G12 - Asset Pricing ; Trading Volume ; Bond Interest Rates
G - Financial Economics > G1 - General Financial Markets > G19 - Other
G - Financial Economics > G1 - General Financial Markets > G13 - Contingent Pricing ; Futures Pricing
G - Financial Economics > G1 - General Financial Markets > G10 - General
|Depositing User:||Saurabh Singh|
|Date Deposited:||28. Sep 2012 11:07|
|Last Modified:||16. Mar 2015 16:58|
1. http://www.mcxindia.com/ was retrieved from 10th June to 11th July 2007.
2. http//:www.gold.org./ was retrieved from 15th June to 5th July 2007.
3. http//:www.atimes.com/ was retrieved on 28th June 2007.
4. http//:www.bmsinc.ca/ was retrieved on 10th July 2007
5. Gold shines as retail Investment: The Hindu Business Line. 10th Oct. 2005. Edited By: C. J. Punnathara
6. Is gold a good investment: International Business times. 11th June, 2007. Edited By: Tim Paradis
7. David Ranson, H. C. Wainwright. (2005). Inflation Protection: Why gold works better then “linkers”. World Gold Council
8. David Ranson, H. C. Wainwright. (2005). Why Gold, not oil, is the superior predictor of inflation. World Gold Council
9. Paul Van Eden. “Gold Prices”. October 21, 2006 Published By: Gold Money. Edited By: James Turk.
10. Frank. E. Holmes. “Gold as a Unique Asset class”. June 2, 2003. Published By: Gold Eagle.