Why Gold Keeps On Rising
An additional role gold plays is for purchasing power. Gold is used during production but the majority of the demand for gold comes from the use as a reserve.
The major exchange for gold although located in London is traded in us dollars with transactions taking place 24 hours a day over different time zones.
Gold is known as what's called a neutral as it is not tied to any country in particular so the price of gold is not under the influence of government. Gold is an important mover of the forex market.
As a reserve the price of gold is tightly tied to the behavior of other non related investment alternatives like bonds, equities and currencies. The price of gold tends to appreciate time of political or monetary instability and low liquidity. Other events such as natural disasters can also affect the price of gold.
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.
In a strong upward trend since April of 2003 when gold was trading at $330 an ounce it is now as recently as December 2009 gold trading at $1,150 which is more than three fold.
Gold is bought and sold by many traders all over the world in the currency market largely as a speculative play as traders try t profit from small and large price movements. Since gold is used largely as a reserve the price is subject to many factors which cause the price to fluctuate.
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. - 23305
The major exchange for gold although located in London is traded in us dollars with transactions taking place 24 hours a day over different time zones.
Gold is known as what's called a neutral as it is not tied to any country in particular so the price of gold is not under the influence of government. Gold is an important mover of the forex market.
As a reserve the price of gold is tightly tied to the behavior of other non related investment alternatives like bonds, equities and currencies. The price of gold tends to appreciate time of political or monetary instability and low liquidity. Other events such as natural disasters can also affect the price of gold.
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.
In a strong upward trend since April of 2003 when gold was trading at $330 an ounce it is now as recently as December 2009 gold trading at $1,150 which is more than three fold.
Gold is bought and sold by many traders all over the world in the currency market largely as a speculative play as traders try t profit from small and large price movements. Since gold is used largely as a reserve the price is subject to many factors which cause the price to fluctuate.
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. - 23305
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