Forex 1 Club

As a currency trader it is very likely that you also keep an eye on the price of gold, because as you well know, there is often an inverse correlation between the strength of the U.S. Dollar and the price of gold.

Never has gold been in greater demand than it is at present. It is almost as if someone somewhere knows that something is going to happen to put the price of gold through the roof.

Do you remember the 1964 film – Goldfinger, Directed by Guy Hamilton?

Goldfinger’s film scheme, codenamed “Operation Grand Slam”, involves breaking into the U.S. Bullion Depository at Fort Knox, penetrating the main storage building with the high powered laser, and detonating a “dirty” nuclear weapon inside, thus contaminating the United States gold reserve and thereby dramatically increasing the value of his gold holdings.

If only Auric Goldfinger had known that all he needed to do was to undermine the strength of the U.S. Dollar, the fictitious multi-billionaire could most likely have succeeded with his task much more effectively by shorting the U.S. Dollar than was the case in the film.

Now it may be apparent to you that as a forex trader you can glean some information by watching gold prices, but did you know that many forex brokers now allow you to trade spot gold on the same platform as the one that you currently use for trading currencies? And most likely if your forex trading system or forex software works well for currencies, it will work surprisingly well for trading gold too.

When trading spot gold, like with forex trading, you are not required to take physical delivery of the gold.

So what do we know that might contribute to the future meteoric rise in the price of gold – or otherwise, for that matter!

In the film, James bond is – at one stage, strapped to a slab of gold with a laser beam cutting through that same golden slab and not too far from splitting the noble Mr Bond in two.

James asks: “Do you expect me to talk?”
Goldfinger replies with the all time classic line: “No, Mr. Bond. I expect you to die.”

Well trying to find out what gold may do next is almost as tricky a situation, but we do know some things for sure…Well almost for sure.

Of all the precious metals, gold is the most popular as an investment.

Investors generally buy gold as a hedge or safe haven against any economic, political, social or currency-based crises. These crises include investment market declines, currency failure, inflation, war and social unrest.
Investors also buy gold during times of a bull market in an attempt to gain financially.

So do we currently recognise any of these situations? I would suggest that we most definitely do.

But is gold a “good” investment? Well from a traders’ point of view, it really does not matter, so long as we can accurately predict what it will do next. But to answer that question I quote from an article in Wikipedia:

“In November 2005, Rick Munarriz of Motley Fool.com posed the question of which represented a better investment: a share of Google or an ounce of gold. The specific comparison between these two very different investments seems to have captured the imagination of many in the investment community and is serving to crystallize the broader debate.[26][27] At the time of writing, a share of Google’s stock and an ounce of gold were both near $700. On January 4, 2008 23:58 New York Time, it was reported that an ounce of gold outpaced the share price of Google by 30.77%, with gold closing at $859.19 per ounce and a share of Google closing at $657 on U.S. market exchanges. On January 24 2008, the gold price broke the $900 mark per ounce for the first time. The price of gold topped $1,000 an ounce for the first time ever on March 13, 2008 amid recession fears in the United States.[28] Google closed 2008 at $307.65 while gold closed the year at $866”.

Coincidentally, at the time of writing this article, gold is at $1036 and the most current google share price is $533.43, so I would conclude that for the present at least, gold can be a very attractive investment vehicle.