Download The Global credit and Financial markets. Gold market

LECTURE # 10
The Global credit and
Financial markets. Gold market
FINANCIAL MARKET
 A financial market - is a market in which people and
entities can trade financial securities, commodities, and
other fungible items of value at low transaction costs and at
prices that reflect supply and demand. Securities include stocks
and bonds, and commodities include precious metals or
agricultural goods.
There are both:
- general markets (where many commodities
are traded)
- specialized markets (where only one
commodity is traded).
IN FINANCE, FINANCIAL MARKETS
FAC I L I TAT E :
 The raising of capital (in the capital markets)
 The transfer of risk (in the derivatives markets)
 Price discovery
 Global transactions with integration of financial markets
 The transfer of liquidity (in the money markets)
 International trade (in the currency markets)
TYPES OF FINANCIAL MARKETS:
 Within the financial sector, the term "financial markets"
is often used to refer just to the markets that are used to raise
finance:
 for long term finance, the Capital markets;
 for short term finance, the Money markets.
 Another common use of the term is as a catchall for all
the markets in the financial sector.
Capital markets which consist of:
Stock markets, which provide financing through the issuance
of shares or common stock, and enable the subsequent
trading thereof.
• Bond markets, which provide financing through the
issuance of bonds, and enable the subsequent trading
thereof.
 Commodity markets, which facilitate the trading of
commodities.
 Money markets, which provide short term debt financing and
investment.
GOLD MARKET
 Of all the precious metals, gold is the most popular as
an investment. Investors generally buy gold as a way of
diversifying risk. The gold market is subject to speculation as
are other markets, especially through the use of futures
contracts and derivatives. Gold price has shown a long term
correlation with the price of crude oil. This suggests a reason
why gold is sold off during economic weakness
Derivatives markets, which provide instruments for the management
of financial risk.
 Futures markets, which provide standardized forward contracts for
trading products at some future date; see also forward market.
 Insurance markets, which facilitate the redistribution of various
risks.
 Foreign exchange markets, which facilitate the trading of foreign
exchange.
GOLD MARKET
CENTRAL BANK
 Central banks and the International Monetary Fund play an
important role in the gold price. At the end of 2004 central
banks and official organizations held 19 percent of all above-ground
gold as official gold reserves.[15] The ten-year Washington
Agreement on Gold (WAG), which dates from September 1999,
limits gold sales by its members (Europe, United States, Japan,
Australia, Bank for International Settlements and the International
Monetary Fund) to less than 500 tonnes a year.
 European central banks, such as the Bank of
England and Swiss National Bank, were key sellers of gold over
this period.[17] In 2009, this agreement was extended for a
further five years, but with a smaller annual sales limit of 400
tonnes.
G L O BA L C R E D I T
 Global Credit provides real-time access to integrated credit
research, market information, and risk analytics
 Global Credit helps users to monitor their credit risk with
breaking news; enhance their analysis with the latest credit ratings,
research and rationales; and boost productivity with direct access to
the content they use most to readily support their analysis,
development of credit memos and other ongoing activities.