The trading glossary is a reference source for pgm
market terminology used on this site and elsewhere.
glossary is available in the Production section.
Terms appearing in italics are defined within
Further information can be found in the FAQs.
A - H | I - Q | R -
A - H
Active Delivery Month:
The quoted delivery month on the most
frequently traded futures contract on a
futures exchange. Spot
prices will be derived from the contract price for
the active delivery month.
Ask: Lowest price at which
a dealer is willing to sell
a commodity or security (alternative term
Assay: Test of precious
metal purity or fineness.
Assay mark: The stamp placed by an
assayer on a precious metal product as a
guarantee of its fineness.
Assay office: An organisation setting and
monitoring the fineness of precious
metals in a particular country
Backwardation: Market scenario when
the spot price of
a commodity is higher than the forward
price. In the precious metal markets this
is the result of the monetary interest rate being less than
the precious metal lease rate.
Price: See Johnson Matthey Base
Bear: A dealer who
expects the value of a commodity, security, currency
or market sector to fall.
Bear market: A market in which prices are
falling or are expected to
fall. Dealers are more likely to be
sellers than buyers in a bear market.
Bear position: A position taken by
a dealer in a bear market,
involving selling commodities, securities or currency
without owning them. See also short
Bid Price: The highest price at which
a dealer is willing
to buy commodities, securities or currency.
Bid - Offer/Ask spread: the difference
between the price at which a dealer is willing to buy
(Bid) and sell (Offer/Ask)
a commodity, security or currency. The Bid will
be the lower of the two prices and
the offer price the higher.
Bull: An investor who expects the value
of a commodity, security, currency or market sector
Bull position: When
a dealer buys a commodity,
security or currency without making a corresponding sale. See
also long position.
Bull market: A market in which prices are
rising or are expected to rise. In a bull market it is more likely
that dealers will be buyers than sellers.
metals such as platinum, palladium, gold and silver in
bulk form, i.e. in the form of bars, ingots
or plate rather than in
coin, grain or sponge.
Buying commodities, securities or currency at a
specified price for delivery at a future date.
Closing Price: The price at the end of
the day's trading on a commodity market or stock
Commodity: A physical substance traded on
a commodity market. Examples of hard commodities include
platinum, copper and oil, whereas soft commodities include grain,
cotton and rubber.
Commodity Futures Trading Commission
(CFTC): The United States Government's regulatory
body for US future markets.
Contango: Market scenario when
the forward price of
a commodity is higher than the spot
price. In the precious metal markets
this is the result of monetary interest rates being greater
than precious metal lease rates.
Dealer: An individual or organisation
that buys and sells products.
Delivery date: The day in the month
that commodities on a futures
contract have to be delivered.
Delivery month: The month in
which commodities on a futures
contract have to be delivered. See Active
Fineness: The proportion
of precious metal in a product or alloy
typically expressed as parts in 1,000.
Forward price: The fixed price at which a
specified amount of a commodity, currency or
security is to be delivered on a fixed date in the future.
Futures contract: An agreement to buy or
sell a fixed quantity of a specified commodity,
currency or security for delivery at a fixed date in the future at
a fixed price. Futures contracts are standardised agreements
traded on futures exchanges.
Grain: Granules of metal usually
derived from melting sponge and pouring the
molten metal into water.
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I - Q
Illiquidity: Illiquid markets are typified by
low levels of trading, with little underlying stock readily
available. Buying and selling can cause exaggerated price
Ingot: A form of metal bar, often a
preferred form for delivery. Derived from casting into a
simple shape for hot working or remelting.
Metals Institute (IPMI): An international
association of producers, refiners, fabricators, scientists, users,
financial institutions, merchants, private and public sector
groups, and the general precious metals community formed to provide
a forum for the exchange of information and
Johnson Matthey Base
Price: The Johnson Matthey Base Price is the
company's quoted selling price for platinum group
metals set by our trading desks in the USA, Hong Kong and
London, based on market offer prices. The price
is for metal in sponge form, ex-JM refinery, and
is normally available to our customers for several hours following
the setting - an advantage not offered by any other price setting
or fixing. The Johnson Matthey Base Price is set 5 times a
day Monday to Friday; for the Asia time zone, at 08:30
and 14:00 Hong Kong time; for the Europe time zone, at 08:00 London
time and for the USA time zone, at 09:30 and 15:00 Eastern Standard
Time. If markets move sharply higher or lower between these times,
prices may be adjusted accordingly. Johnson Matthey Base prices are
also published in Platt's Metals Week, Metal
Bulletin and American Metals
Liquidity: Liquid markets are typified by
high levels of trading, with underlying stock readily available and
buying and selling causing minimal price fluctuations.
Lease rate: See precious metal
swap: The dealer practice of
exchanging a quantity of metal in one location for an equal
quantity of metal in an alternative location held by
another dealer. Location swaps help to
reduce shipping costs and can reduce manufacturing lead
London Platinum &
Palladium Market (LPPM) Fixings: The London
Platinum & Palladium Market (LPPM) Fixing (Pt and Pd only) -
sometimes referred to as the London Fix - is a snapshot of the
price taken each day at 09:45 (am fix) and 14:00 (pm fix) London
time. It serves as a reference point and is published widely. The
fix is a bid price loco Zurich plate - a price which the members of
the LPPM would have been prepared to pay for platinum and palladium
in the form of plate or ingot,
deposited in a Zurich vault. Customers can instruct dealers to
purchase metal at the fix price prior to the fix but they will
incur charges for brokerage, conversion and transportation. Again
payment is generally due within two days and of course buyers do
not have the benefit of knowing what the price is before they
purchase. Prices have been known to move considerably between
Long position: (i) Position on
a futures exchange where a dealer is a net
holder of contracts, i.e. contracts bought outweighs contracts
sold. (ii) The position of owning a commodity or
Long liquidation: Reducing the amount of
a commodity, security or contracts held.
York Mercantile Exchange (NYMEX): The largest
physical commodity exchange in the world. Futures contracts
are traded on the Exchange in an anonymous, open, and competitive
auction, based on open outcry. The exchange acts as the
counterparty on every trade, clearing (matching) orders amongst the
members. The Exchange's platinum contract is the longest
continuously traded precious metals contract in the world's
marketplace, first traded in 1956.
Offer price: Lowest price at which
a dealer is willing to sell a commodity or
security (alternative term to ask).
Open interest: The number of open or
outstanding contracts on a futures exchange for
which the holders are still obligated to the futures
exchange concerned. No offsetting sale or purchase has
yet been made against it. Open interest is used as an indicator of
the level of commercial activity in a particular futures
Open position: A long or short trading
position that is not yet closed. In either case the dealer
remains vulnerable to fluctuations until the position is
Plate: bullion form of metal.
Platinum Group Elements/Platinum Group Metals
(pge/pgm): The six metallic elements platinum, palladium,
rhodium, ruthenium, iridium and osmium.
Precious Metals: The six platinum group
metals, gold and silver.
Precious Metal lease rate: An interest
rate charged for borrowing precious metal.
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R - Z
Rally: A considerable rise in the value
of a commodity, security or market after a
Short selling: (i) A strategy in which a
speculator sells a commodity or security that he
or she does not own in order to profit from a falling market.
The speculator will borrow the commodity or
security from a third party and then immediately sell on to the
buyer. At a later date, the speculator must make good on the loan
by buying back the commodity or security from
the market to close the position. If the value of
the commodity or security has fallen during this
period the speculator's profit will be the difference between his
original sale price and the buyback price (minus interest charges
and fees). However, if the market moves against the
speculator there is the potential for limitless losses. (ii)
Selling a futures contract.
Short covering: The act of buying back
a commodity, security or opposing futures contract to
close out a short position.
Short position: Position resulting from
a short selling strategy.
Sponge: A powdered form of a
pgm. Commonly, the form required for manufacture of many
pgm-based chemicals and catalysts.
Spot market: A market in
which commodities are bought and sold for cash
and immediate delivery.
Spot month: The nearest delivery
month on a futures contract.
Spot price: The delivery price of
a commodity being traded on a spot
Spot purchasing: Purchasing
a commodity in the spot
market for immediate payment and delivery (typically two
Spread: The difference between the
current bid and offer (ask)
prices for a commodity or security.
Square position: A trading condition in
which a dealer has neither a long position nor a
Exchange (TOCOM): The
Japanese futures exchange, which has offered
platinum contracts since 1984 and palladium contracts since
1992. Unlike NYMEX, trading of these contracts
is conducted electronically and not by open outcry. TOCOM
trading also differs in that the exchange does not act as the
counterparty for all members through the clearing process.
Trade date: The date on which a
trade is executed for a specified value date.
Trading volume: (i)The total number of
contracts traded in a set period of time on a futures
exchange. (ii) The amount of a
physical commodity, security or currency traded in a
particular market or during a set period of time.
Troy ounce: The traditional unit of
weight for precious metals. One troy ounce =
31.1034807grams; 32.150746568 troy oz = 1 kilogram.
Value date: The date on which
a commodity is delivered to an account and
usually when payment is due (unless other payment date arrangements
are made between the relevant parties).
Volume: see trading volume.
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