Robert Kiyosaki - Rich Dad, Poor Dad
Sell high, buy low.
You decide to short gold because you believe it's going to decline in value.
Sell 1 August gold contract a $500 per ounce on COMEX.
Buy 1 August gold contract at $450 per ounce on COMEX.
A $50 per ounce profit was realized. Since each COMEX contract contains 100 troy ounces of gold, a total profit of $5000 was earned. From this would be deducted the transaction costs (brokerage commission; NFA, FCM, and exchange fees), which could be $100 more or less.
Note: See the appendix, "Contract Specifications." An offsetting futures position must be for the same commodity, delivery month, quantity, and exchange, but on the opposite side of the market, as the initial position.
modity. On a cash basis, a farmer would be short corn if it is currently not in the inventory. It has been agreed to accept delivery of a specific number of bushels of corn of a specific grade (quality) at a specific location (grain elevator) at a specific time and price.
A little historical perspective may help in explaining this basic concept. The modern futures markets began to develop in the early 1800s. Chicago, because it was a strong financial center in the heart of the corn, cattle, and hog country, was one of the early centers. It is still a leading center today.
Jim Cramers Real Money Sane Investing In An Insane World Cramer