About AMEX Gold

Two major gold indices dominate the market: The AMEX Gold BUGS Index (HUI) and the XAU, which is listed on the Philadelphia Stock Exchange. The biggest difference between the two indices is that the AMEX Gold BUGS Index is comprised exclusively of mining stocks that do not hedge their gold positions more than a year-and-a-half into the future. Because of this, the HUI tends to be more profitable than the XAU when gold prices are rising; however, losses will accumulate more quickly when the price of gold declines.

The AMEX Gold BUGS Index was introduced on March 15, 1996; trading began at a level of 200 index points. BUGS is an acronym that stands for Basket of Unhedged Gold Stocks. The Index comprises 15 of the nation's largest unhedged gold mining stocks. It is a modified equal dollar weighted index of companies involved in gold mining; this means that the stocks in the index are all equally weighted.

Adjustments to the AMEX Gold BUGS Index are made quarterly, occurring after the market close on the third Friday of March, June, September, and December.

While the AMEX Gold BUGS Index increases quickly along with rising gold prices, it will also decline much faster during weakening gold prices than its hedged cousin, the XAU.

The AMEX Gold Bugs Index has a high correlation to the spot price of gold. Trading options on the HUI index is thus one of the many ways traders can invest in gold (among gold funds, futures, options, or the metal itself).

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