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Writing an Essay on Gold Futures

The concept of futures and futures markets, involving a legal binding contract for the delivery of a specified quantity of a commodity at a specified time in the future at an agreed price, originated in Chicago in the 1830s. The idea behind this was to make the prices even and give farmers, in particular, some way of hedging their crops well before harvest. After the American Civil War, the Chicago Board of Trade formalized this into the first real futures markets with standardized contracts.

Gold futures contracts entered the scene much later, towards the end of 1974. The primary reason for this was the fact that trading in gold was non-existent as the United States was on a fixed price gold standard (The monetary system with a fixed price for gold and with gold coin either forming the whole circulation of currency within a country or with notes representing and redeemable in gold) until 1933. The futures trading in gold made its entry with the first gold futures contract trading in New York on the Commodity Exchange (COMEX) on December 31, 1974. Later, other American exchanges, including the Chicago Board of Trade, followed suit. In fact, there was also a trial run for gold futures with a 400-ounce; the traditional unit of weight for gold is the troy ounce, named, it is thought, after a weight used at the annual fair at Troyes in France in the middle ages. Although the metric system is used increasingly in mining and the gold business, the troy ounce remains the basic unit in which the price of 995 gold is quoted (One troy ounce = 31.1034807 grams, 32.15 troy ounces = 1 kilogram) (troy ounce = 480 grains, 3.75 troy ounces = 10 tolas; as known in India). The American exchanges, particularly, COMEX, has brought a new dimension to international gold trading. COMEX enjoyed significant advantages owing to its close affinity with New York’s banks and financial institutions, which provided access to a worldwide clientele. COMEX later merged with the New York Mercantile Exchange (NYMEX) in 1994.

Experts like Dr. Richard S Appel of financialinsights.com observe that the markets have entered a secular Bull Market in both metals. Although he says that we are at present only in the initial stages. In his column, “The Great Debate: Trading vs. Long-term Gold Investing,” he writes, “Given the various reasons for the emergence of gold’s bull market, and the sequence of events that have transpired since its birth, I am confident that these bull markets will not end for several years, at minimum.”

He says that the primary financial benefits of trading in a confirmed bull market is that it often gives the trader a form of leverage, and the hope that one can garner larger profits than if he only bought and held. The added leverage has the potential to substantially increase one’s profits. For example, he says, “if a person purchases gold futures or gold call options they must only commit a small percentage of the underlying gold’s value to initiate the trade. Then, if prices move higher, the profits that result may be a multiple of those that would accrue if he owned the physical metal.”

Unfortunately, this can act as a double-edged sword if the trade, even for a short period, goes against the trader. And, in isolated situations they may be devastating, he adds. He further comments that in the case of futures contracts the person is not only liable for his committed margin, but also for all losses that may occur while he holds the contract.

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Get an 80 Paydex Score in 2010

Let me start by saying that I am tired of seeing articles on the internet full of fluff. This is one of the few articles that I personally publish on the internet, other than my blog, and I will try my best to leave out as much fluff as possible(other than this initial rant about nonsense articles online). For those of you who know how to get an 80 paydex, but simply want to get the names of companies that still report to Din and Bradstreet, you can skip the explanation and go to the end of the article.

Your Paydex Score as many people know is the system that DnB(the main business credit bureau) uses to assess your credit worthiness by rating how timely you pay your bills. You can view the basic chart by DnB below.

D&B Score Interpretation Table D&B PAYDEX Score Payment Habit 100 Anticipate 90 Discount 80 Prompt 70 15 days beyond terms 60 22 days beyond terms 50 30 days beyond terms 40 60 days beyond terms 30 90 days beyond terms 20 120 days beyond terms UN Unavailable

Typically, you will never get over an 80 paydex. In the years that I have been building business credit, and after looking at hundreds of business credit reports, I have personally only seen two companies with a paydex score of above 80 and they were both below 90. I suspect that one of them was artificially created, but thats a story for another day.

There are varying requirements floating around the internet about what is needed to get an 80 paydex(which is your initial goal in building business credit). The bottom line is this, you need 3 companies(not 4,5 or 6) to report to DnB that you have paid your bills in a timely fashions. Once that is done you will get your 80 Paydex. The problem now, is that many companies either stopped reporting to the credit bureaus, or require high spending in order to report.

The companies still gives credit to brand new companies and also report to DnB very quickly.

AT&T – They are your phone provider but you will want to open a phone line or remote call forward number with your Tax ID in the name of your business. Once you pay your bill on time, they will report to DnB and this can count as one of the three companies that you need to report.

Quill – These guys give net 30 accounts to brand new businesses. You will have to put something in your shopping cart, and when checking out, simply choose to be billed. If you do not understand, give them a call and they should give you an account but getting billed online works more often than calling in. I have never personally got denied online but I have been denied when calling in.

Reliable – This company’s process is the same as Quill. They report to both DnB and experian business. A perfect starter company in your business credit journey.

Uline – Although much of the items that they sell may not be useful, you can order something cheap and pay it off on time and they will report.

Ok, so now that you know about paydex scores and who to start with the process, you need to know about the minimum order. What most people do not know is that companies cannot report less than $50 to the credit bureaus. This does not mean that you have to spend $50 in order to build business credit. The good news is that if you simply spend $5, lending companies will either report $50 or they will report the size of the line of credit.

You can get all complete guide on business credit at http://www.businesscreditebooks.com

Marc Augustine is the author of multiple guides on building business credit and blogs at http://www.creditrich.net

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