Why Gold Keeps On Rising
Gold plays an additional role, which is to serve as a store of purchasing power. It can also be used in productive processes but the bulk of gold demand comes from its use as a reserve.
Transactions in the gold market take place 24 hours a day even though markets are in different time zones. Gold is traded in us dollars even though the major exchange is in London.
In the Forex market, gold is neutral, or in other words not tied to any particular country, so that increases in the price influence operations in several currencies. Gold prices are an important driver of forex market.
Since being a reserve currency the price is closely related to other alternative investments such as currencies, equities, bonds or even oil. Another great aspect investors really like about gold is that during periods of low liquidity or even monetary or political unrest is that the price of gold tends to actually rise in value.
While the equity markets have been highly unstable over the last several years making both great gains and tremendous loses during the crisis the price of gold has been rising the whole time making large gains. Adjusted for inflation the price of gold is actually much higher than it was during the early 1980s highs.
Anyway the trend is upward, as in the past five years the nominal price of gold rose from U.S. $330 an ounce in April 2003 to U.S. $900 in early April 2008.
Many traders buy and sell gold in the currency market purely as speculative plays trying to make profits from small and large fluctuations in price. This does not mean trading gold is easy, because gold is mostly used as a reserve it is subject to many psychological and monetary factors.
Investing in the short term to earn more than other types of investments can be very risky. As always do your research and be prepared to also manage your risk. - 23199
Transactions in the gold market take place 24 hours a day even though markets are in different time zones. Gold is traded in us dollars even though the major exchange is in London.
In the Forex market, gold is neutral, or in other words not tied to any particular country, so that increases in the price influence operations in several currencies. Gold prices are an important driver of forex market.
Since being a reserve currency the price is closely related to other alternative investments such as currencies, equities, bonds or even oil. Another great aspect investors really like about gold is that during periods of low liquidity or even monetary or political unrest is that the price of gold tends to actually rise in value.
While the equity markets have been highly unstable over the last several years making both great gains and tremendous loses during the crisis the price of gold has been rising the whole time making large gains. Adjusted for inflation the price of gold is actually much higher than it was during the early 1980s highs.
Anyway the trend is upward, as in the past five years the nominal price of gold rose from U.S. $330 an ounce in April 2003 to U.S. $900 in early April 2008.
Many traders buy and sell gold in the currency market purely as speculative plays trying to make profits from small and large fluctuations in price. This does not mean trading gold is easy, because gold is mostly used as a reserve it is subject to many psychological and monetary factors.
Investing in the short term to earn more than other types of investments can be very risky. As always do your research and be prepared to also manage your risk. - 23199
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posted by X - Men @ 7:56 AM
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