Spread Bet on Randgold Resources Shares | Trade Randgold
Randgold is a young company centred on mining gold. When gold prices rise, there is a strong indication that the shares will increase in value, too. Since the global economic crisis, there has been continual pressure in the markets to move into physical wealth such as gold, rather than relying on shares or paper money, and therefore Randgold has done exceptionally well in recent years, as can be seen on the chart.
From a value of around 1200 in 2007, the shares have risen to nearly 8000, and are now trading between 5000 and 6000. It must be emphasized, however, that mining shares are one of the most volatile sectors that you can invest in, and you must make sure that your escape plan from any bet you place is efficient at retaining your capital. This is a monthly price chart, and you can see that the month of March 2012, the long red candle, resulted in a drop of nearly 2000 points.
The company was established in 1995 and first listed publicly in 1997. It is head-quartered in Jersey, and also listed on the American NASDAQ exchange. It concentrates on mining in Mali, a French-speaking landlocked country in Africa bordering on the Sahara desert.
It appears that the company understands these issues, as one of its stated objectives is to develop future prospects. In addition the existing reserves are being utilized more fully, with production up substantially in recent years. What you’re looking at is share values that tend more towards established expertise than towards proven reserves.
From a spread betting perspective, whether the company is successful or flounders for lack of additional reserves is irrelevant. It is a volatile stock, and therefore not recommended for the novice, but for the experienced spread better who is prepared to trade on the technical analysis and move quickly when the need arises, it could be a profitable venture.
Spread Betting Randgold Resources Rolling Daily
Randgold is an African based mining company, and you can expect the share prices to be volatile. The current pricing of the shares for a daily rolling spread bet is 5125 – 5135. There have been reports of civil unrest and rebel fighting in Mali, where Randgold bases its operation, so you may wish to take a short position on the shares, staking perhaps £4 per point.
Suppose that the shares fall in value, as expected, giving you a winning position. You might choose to close your spread bet and take your profit when the price goes down to 4896 – 4906. Working out how much you have made, you know that your starting price for a sell bet was 5125, and the closing price was 4906. That means you have gained 219 points, the difference. With a bet of £4 per point, your winnings amount to £876.
The markets can be unpredictable, and perhaps the share price did not fall after you placed your bet. When it went up to 5278 – 5288, you decided to cut your losses and closed the bet. In this case the starting price was once again 5125, but the spread trade closed at 5288. 5288 less 5125 is 163 points, so multiplying that by £4 you have lost £652.
You probably don’t spend all your time watching the market prices, and you might have exited your losing trade earlier if you had known where the price was going. That is why many spread traders use stop loss orders, which automatically close your losing trade when it reaches a level you specify. In this case, the trade might have ended when the price was at 5205 – 5215. Your bet closed at 5215, and taking away 5125 you would have lost 90 points. This would have cost you £360.
Randgold Resources Futures Style Spreadbet
As a mining company in West Africa, you can expect Randgold to be volatile in price, and need to watch out if you spread bet on it. However, it’s interesting to see that the futures based prices cost only a little more than the rolling daily bets, in terms of an increased spread, which makes them more viable if you intend to hold the spread bet open for a few weeks. The current rate for the mid-quarter futures price is 5168 – 5180. If you think that the shares are going to go up in value, you could place a long spread bet for £6 per point at 5180.
If the price does go up as you expect, then you could close your spread trade and collect your winnings when the quote reaches 5326 – 5337, say. You opened your bet at the buying price of 5180, and in this case you closed the trade at the selling price of 5326. The difference between these two is 146 points, and multiplying that by your stake of £6 per point your winnings work out to £876.
If you hadn’t been so lucky, and the price had gone down after you placed your bet, you might find that you closed out the trade for a loss when the quote was 5082 – 5093. Your starting price again was 5180, but in this case the spread trade closed at 5082. 5180 minus 5082 is 98 points. Your wager was £6 per point, which means you have lost £588.
Finally, you might have chosen to place an open stoploss order on this bet when you made it, and that would automatically take you out of the trade when it reached a certain level of loss. If you had done this, you might find that you were out of the bet when the price was 5109 – 5121. The spread bet closed at 5109, and taking that away from the starting price of 5180, in this case you have lost 71 points, for a total loss of £426.
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