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| Some Definitions about Day-Trading / Part 4 |
| About INDICES ! |
| GOLD Index (HUI) |
Introduction
Two major gold indices dominate the market--the Philadelphia Stock Exchange’s XAU and the AMEX’s Gold BUGS Index (HUI). The major difference between the two
is that the BUGS index is made up exclusively of mining stocks that do not hedge their gold positions more than a year-and-a-half into the future. This makes the
BUGS Index much more profitable than the XAU when gold prices are rising, but can also compound its losses when gold declines. BUGS is an acronym for Basket
of Unhedged Gold Stocks. The index was introduced on March 15, 1996 with a starting value of 200.
Composition
The AMEX Gold BUGS Index is comprised of 15 of the nation's largest “unhedged” gold mining stocks. It is a “modified equal-dollar weighted” index. As a result, most
of the index's component stocks are equally weighted, yet the largest stocks still carry a greater weight than the smallest.
The table below lists the components of the Gold BUGS Index along with the weighting that each stock carries in the index (data as of August 2004) :
Two major gold indices dominate the market--the Philadelphia Stock Exchange’s XAU and the AMEX’s Gold BUGS Index (HUI). The major difference between the two
is that the BUGS index is made up exclusively of mining stocks that do not hedge their gold positions more than a year-and-a-half into the future. This makes the
BUGS Index much more profitable than the XAU when gold prices are rising, but can also compound its losses when gold declines. BUGS is an acronym for Basket
of Unhedged Gold Stocks. The index was introduced on March 15, 1996 with a starting value of 200.
Composition
The AMEX Gold BUGS Index is comprised of 15 of the nation's largest “unhedged” gold mining stocks. It is a “modified equal-dollar weighted” index. As a result, most
of the index's component stocks are equally weighted, yet the largest stocks still carry a greater weight than the smallest.
The table below lists the components of the Gold BUGS Index along with the weighting that each stock carries in the index (data as of August 2004) :
Newmont Mining
Gold Fields
Freeport McMoran
Iamgoldcorp
Meridian Gold
Harmony Gold Mining
Goldcorp GG
Randgold Resources
Gold Fields
Freeport McMoran
Iamgoldcorp
Meridian Gold
Harmony Gold Mining
Goldcorp GG
Randgold Resources
NEM
GFI
FCX
IAG
MDG
HMY
GG
GOLF
GFI
FCX
IAG
MDG
HMY
GG
GOLF
Agnico Eagle Mines
Kinross Gold
Glamis Gold
Hecla Mining
Eldorado Gold
Golden Star Resources
Coeur D'Alene Mines
Kinross Gold
Glamis Gold
Hecla Mining
Eldorado Gold
Golden Star Resources
Coeur D'Alene Mines
AEM
KGC
GLG
HL
EGO
GSS
CDE
KGC
GLG
HL
EGO
GSS
CDE
Positives
When gold prices are on the rise, the Gold BUGS Index provides an excellent way for investors to capitalize on that increase. The index has a high correlation to the
spot price (current price) of gold.
Drawbacks
When the price of gold declines, the Gold BUGS Index tends to fall much faster than its hedged cousin, the XAU. In addition, the firm's unusual index weighting
system can be difficult to understand.
How can I trade/invest in this index ?
There are numerous ways to invest in gold. You can buy different funds, futures, options, or you can invest directly in the metal itself. Our recommended way to invest
in this index is through options traded on the HUI index.
When gold prices are on the rise, the Gold BUGS Index provides an excellent way for investors to capitalize on that increase. The index has a high correlation to the
spot price (current price) of gold.
Drawbacks
When the price of gold declines, the Gold BUGS Index tends to fall much faster than its hedged cousin, the XAU. In addition, the firm's unusual index weighting
system can be difficult to understand.
How can I trade/invest in this index ?
There are numerous ways to invest in gold. You can buy different funds, futures, options, or you can invest directly in the metal itself. Our recommended way to invest
in this index is through options traded on the HUI index.
E-Mail : Herman.Bogaerts@Wanadoo.fr --- Herman_Bogaerts@Yahoo.com
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