87

Precious metals have primarily been useful as a stable store of value, not a way to make a profit The best argument in favor of precious metals has generally been that they hold their value against inflation while being hard to manipulate by governments/central banks/currency traders/etc. But that's not an investment - that's just a store of value. There's ...


37

This is known as "Zone Pricing" or "Geographical Pricing". http://articles.latimes.com/2005/jun/19/business/fi-calprice19 Such price variations may seem odd, but they are not unique to Anaheim. On any given day, in any major U.S. city, a single brand of gasoline will sell for a wide range of prices even when the cost to make and deliver the fuel is the ...


26

You could buy shares of an Exchange-Traded Fund (ETF) based on the price of gold, like GLD, IAU, or SGOL. You can invest in this fund through almost any brokerage firm, e.g. Fidelity, Etrade, Scotttrade, TD Ameritrade, Charles Schwab, ShareBuilder, etc. Keep in mind that you'll still have to pay a commission and fees when purchasing an ETF, but it will ...


19

The entire point of these exchanges is to deal commodities for delivery and in the past investors and speculators who didn't want delivery got into some trouble when they forgot to sell out of their futures positions before the maturity date. Indeed even the great (if you like that kind of economics ;) ) Keynes did this accidentally once whilst trading his ...


15

Location, Location, Location. The closer to the highway, the more they can charge. People want to go less than a mile from the exit to get gas. Therefore they save time, but spend more money. That is understandable, so the gas station takes advantage of the situation.


13

if you bought gold in late '79, it would have taken 30 years to break even. Of all this time it was two brief periods the returns were great, but long term, not so much. Look at the ETF GLD if you wish to buy gold, and avoid most of the buy/sell spread issues. Edit - I suggest looking at Compound Annual Growth Rate and decide whether long term gold ...


10

Platinum use is pretty heavily overweight in industrial areas; according to the linked Wikipedia article, 239 tonnes of platinum was sold in 2006, of which 130 tonnes went to vehicles emissions control devices and another 13.3 tonnes to electronics. Gold sees substantial use as an investment as well as to hedge against economical decline and inflation, with ...


10

Here's a good link that can answer your question: How to take delivery of a futures contract The relevant part states: Prior to delivery day, they inform customers who have open long positions that they must either close out the position or prepare to take delivery and pay the full value of the underlying contract. By the same token traders with short ...


10

You can buy "real" commodity on a commodity exchange. Every exchange has rules for every traded commodity. The rules include also the day of delivery (usually few days, weeks after last trading day) and the assigned warehouse, where you should deliver, or pick up your commodity. So even, if the majority of trades are hedges/speculation (you can see it on ...


10

Some futures markets are priced using a fractional pricing rather than decimal pricing. The example you've mentioned, Soybeans, is priced in cents per bushel, and the "tick size" (the minimum amount the price can move) is 2/8ths of a cent. So, 990-4 means 990 and 4/8ths of a cent. Also, it's not just some commodities priced this way - some interest rate ...


9

You're missing the cost-of-carry aspect: The cost of carry or carrying charge is the cost of storing a physical commodity, such as grain or metals, over a period of time. The carrying charge includes insurance, storage and interest on the invested funds as well as other incidental costs. In interest rate futures markets, it refers to the differential ...


8

I only have anecdotal evidence here as members of my family used to own a grocery store / gas station, but they were often time charged much more to have the gasoline delivered to than many gas stations which were just a mile or two away (up to 15% more). Also depending upon the branding of the gas station, they are required to use certain distributors (i.e....


8

It has properties of both. Tax authorities will eventually give their opinion on this. Through its properties of finite quantity, fungibility, and resistance to forgery/duplication, it acts as a commodity. It can be sent directly between any two parties anywhere on Earth, without regard for the quantity transacted or physical distance, to act as a ...


8

I am not aware of Steel being offered as commodity in India on regulated exchange. Even if there is one, generally it would be sheets/rolls. These are not directly fit for use. One would need to convert these into required rods by melting process. Most commodities in India are for future deliveries so if you buy something, on the specified date you would ...


7

When I ran a gas station, our price was largely set by our neighbors-- the other gas stations in the area. We couldn't go below the current cost of replacement gas, but other than that we wanted to be at .05 over the average. (We got away with charging more because we were the last station on a major road.) Everybody else did the same thing. Also, we only ...


7

This BBC article says that nuclear power notes came about when the French energy company EDF purchased British Energy in 2008: The note changes in value with wholesale energy prices and power output levels from British Energy's existing nuclear stations. EDF Energy's website describes these notes under the section titled "Nuclear Power Notes": When ...


7

No, it is not for the reason you suspect. Some long-term investors might actually allocate a small percentage of a diversified portfolio to a commodity ETF, as a hedge. Rather, the obvious reason (and it really should be obvious!) is that a hunk of metal or a barrel of oil don't by themselves generate any cash flow. There simply is nothing to distribute. ...


7

Not all futures contracts are deliverable. Some futures are specified as cash settlement only. In the case of deliverable contracts, part of the specification of a futures contract will be the delivery locations. As per my answer to your previous question, please see the CME Rulebook for details of delivery points for the deliverable futures contracts ...


6

And you have hit the nail on the head of holding gold as an alternative to liquid currency. There is simply no way to reliably buy and sell physical gold at the spot price unless you have millions of dollars. Exhibit A) The stock symbol GLD is an ETF backed by gold. Its shares are redeemable for gold if you have more than 100,000 shares then you can be ...


6

In order for a commodity to be offered as a future, the exact specifications must be specified by the exchange. This includes not only the particular grade, strain, etc (depending on what we are talking about) but also the exact delivery location (otherwise transportation costs is an issue as you noticed). Once there is a standardized contract, the ...


6

Firstly, steel futures trade on the London Metal Exchange, maybe on other exchanges as well. Perhaps your 32 number was limited to one exchange? I've not researched all the exchanges, but I'd wager there are far more than 32 commodities for which futures contracts can be entered into. How is it determined which commodities get futures and which don't? In ...


6

Gold stocks (and ETFs and mutual funds comprised of gold stocks) are a reflection of the price of gold during that period. There are years when they are the best or near best performers among all funds. There are years when they are the worst or near worst performers. There are years when they are the just blah and trade in a box. You can see this by ...


5

Some of this is demand management. The local BJ's wholesale club sells gas $0.10-0.15/gallon less than the prevailing rate. Typically there are lines of 3-5 cars waiting for a pump during busy periods. People are price-conscious when buying gas, which draws crowds and the retailer actually wants a line -- the whole point of the gas station is to draw ...


5

One factor I haven't seen mentioned is volume. Suppliers will charge a slightly lower price to the station if they buy in full tanker truck loads instead of smaller quantities. Where I am this is probably still the largest factor in price spread with all newer bigger stations being 20-30 cents cheaper than the old small ones (often a repair shop with 2 ...


5

No, debit cards are generally tied to bank accounts which would hold some form of cash though this may be in various denominations such as US Dollar, Yen, Canadian Dollar, Euro, etc. Something to consider in what you are proposing is to handle a few main points. Does the bank convert the asset to cash? Does the payment processor convert this? Does ...


5

Yes and no. First off, commodity prices reflect the cost of a good about 3 steps back in the retail supply chain; the agreed-upon price for the raw foodstuff between farmers/ranchers and manufacturers. Your grocer may carry bags of whole grain wheat, but that's certainly not all he carries that contains it. Same for corn, rice and other staple grains, as ...


5

Its neither. Its a scam. there's no value underlying it, and it has proven to be the most speculative and untrustworthy investment there is. The scam works like a pyramid scam, so the more people come later on the more people who came in earlier on gain, so that is why you see so much hype around it encouraged and fueled by those early adopters who'll cash ...


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