with gold constantly going down why arent you all shorting gold in the stock markets?

[timmy]

whats your excuse:tin:

[maks]

I don't own any investments, I spend my money as soon as it comes in, living large is like irl raw dog yo

[Tahiti Joe]

Chinese are buying.

[Poopalew]

Chinese are buying.

A black person stole my car.

[Autistic Spectrum]

A black person stole my car.

holy shit u are racist too,

[Poopalew]

holy shit u are racist too,

No lets go to a Scream Bar and get wasted!

[timmy]

Hahahaha this made me shit out my fucking liver

[jon]

gold has been falling for months and only just the past couple of weeks consolidating a new floor around USD$1200

only reason i can think of for tim to make this thread is he doesn't know how to do this, or what it really is

well timmo when you promise to sell someone some gold for X dollars at time Y they pay a small fee Z and get an "option" which is described by a contract with you for X and Y

so, if you think gold is going to fall below $1200, but you want to get rid of yours and get that $1200, but nobody will buy today at $1200, then you sell some of these options instead

a "naked" short is when you sell these options without actually owning the gold (or whatever item)

naked or not, the only way to "cover" is to ensure that by the time Y rolls around, you have all of the goods you said you would have for sale immediately available to you. you cannot break the contract

now you can't just wait until 1 minute before Y to buy the gold at a better price, because if that price came true, the person would just not execute the option. they paid for it, so they don't have to actually take it. they would just buy the gold they want, you would be stuck with gold that fell from $1200 to the new low price, and you would not get your $1200 or any other cash in exchange for it (until you did actually sell, of course)

when you go through a broker what you actually do is pay them amounts of money to do these things with other amounts of your money on your behalf, provided there are willing buyers/sellers on the other side of each transaction

when you tell your broker you want to make short sales then they usually make you open a margin account, which is like a credit line. you deposit 10% of your desired line, maybe more, up to certain legal limits based on your net worth

suppose you sell an option (for maybe $25 let's say) to sell someone an ounce gold a week from now (current price $1200) thinking it will go down to $600, but not knowing how high it might go

suppose they execute it, not caring which way the market turns (you never know if the person on the other side of the trade expects it to go high, or to go low, effectively taking your bet, yes this is similar to gambling (there is no house (well there kinda is, a central bank is basically the house)))

a week goes by and gold falls to $600, they execute. they have paid $625 but now have an ounce of gold which was $1200 just seven days before. it may readily go right back to where it was. you now have $625 more than you had before, but you are also "out" and have shifted your risk from gold to the USD. (lol, good choice)

a week goes by and gold rises. notice that while gold can fall to $0 but not below, it can rise more or less indefinitely. the headroom on the implied USD price of gold, last i checked, was medium five figures. so let's say it rises to $65,000 in a week. they execute. you now have to part with a potentially $65,000 asset in exchange for $625 in deposits.

uh oh, it gets better! it was a naked short. you don't even have the gold to give to the buyer! now (unless you are j.p. morgan, bank of america, or a fed-managed entity like maiden lane) you have to pay $65,000 plus premium to buy a gold coin to fulfill your contract. instead of being $625 in the money, you are now out $64,375. assuming you do not declare bankruptcy because you are a bogan trailer muppet, this balance is put on your margin account and you pay interest charges on it daily, based on the length of time they believe it will take you to pay back this charge you've now made

*when you are a major bank or a fed-managed corporation your contracts state delivery may be foregone in favor of cash equivalent. meaning the fed will print money and add it to the money supply to cover this loss, rather than go into debt to anybody, and that they also extend this protection to large investment banks that handle US treasuries

so now that you know what you're doing, don't

get fucked

[timmy]

jon ive been shorting gold on a monopoly money exchange game using real info, ive made millions already shorting gold im pretty sure i know what im doing okay, no need to explain everything in plain english for me just to tell me to get fucked at the end(i already knew what shorting was because i read it up and it was more to the point than your verbose angry post filled with hatred)

[timmy]

ill summarize what you need to know on shorting, jon, next time just paraphrase this "if you think X will go down to Y price short it at J(on is a fag) and then make profit or loss depending on whether it rises or falls"

[timmy]

the inner workings of stock market shit that nobody cares about

[timmy]

do u even invest?

[lnopia the great]

do you even invest bro

[rubycalaber]

I have investments in child slave labor camps in china lmao

[timmy]

I have investments in child slave labor camps in china lmao
for some strange reason i dont doubt that

[jon]

why'd you think i was angry, i was just offering the information that you know you don't have

[Autistic Spectrum]

i think tim got upset when you called him a bogan trailer muppet

[jon]

did i, though, if he is actually an experienced trader, who wears a suit and tie

[timmy]

http://gyazo.com/5d912cc8a85f8297a0c431cc70ae25e2.png

[m0nde]

lol ^