Wednesday, 30 May 2012
What is Spread?
Q: What is Spread?
A: Definition of 'Spread'
1. The difference between the bid and the ask price of a security or asset.
2. An options position established by purchasing one option and selling another option of the same class but of a different series.
+ Spread in Gold & Silver investment is the different between "We Sell" and "We Buy".
+ Normally, the spread for Gold (5-15%) and Silver (13-25%) depends on company.
+ If you have bought a product (We Sell), and you want to sell back your products, you have to make sure that the buying (We Buy) price from company has passed your (We Sell) in order to get profit.
+ Most of investment portfolios have spread.
+ This knowledge is a basis of any investment. You have to understand this first before starting your investment.
+ We Buy = Forced Sale Value
+ Forced Sale Value is price at which an asset can be sold within short time (auction).
+ The reason for spread simply because the gold markets or company or dealers want to make profit.
i) Gold: 5-7%
ii) Silver: 13-15%
*Normally gold dealers buy back at 5% less than market price, Poh Kong or Habib Jewel or any gold markets buy at lowest (15% or bigger).