subject: Learn The Ultimate Commodity Trading - Invest In Gold And Silver! [print this page] Men and women like to wear gold necklaces and rings. Gold is considered to be a precious commodity.But have you ever thought of trading gold? Read this article to know why this might the best time to trade gold.
Gold prices recently breached the historical barrier of $1200 per ounce. For the last many years,the gold market is in a secular uptrend. Why gold is becoming hot? In times of financial crisis like the present global recession and during times of political uncertainity, wealthy people try to invest in safe haven assets like gold. During these times, gold is considered to be the safest investment.
US Dollar has the status of an international reserve currency right now. It is expected that US Dollar will devalue substantially in the near future. Countries like China, India, Russia and Brazil are trying to convert their dollar reserves into gold. Gold has been and is still the ultimate safe currency. Remember the days of the gold standard in the 19th century when every currency was pegged to gold. In the present scheme of things,gold standard has been abandoned and currency prices are determined by the market foreces. However, we might get the gold standard back, no one knows for sure though!
So their are many big buyers of gold in the market but the supply of gold is limited. There are only a few gold mines in the world that cannot keep pace with the rising demand.China will purchase more than a hundred tons of gold in 2010. So will India, Russia and Brazil. They are big buyers. They need tons of gold. By just investing in something like 10-20 ounces of gold, you can reap the benefits when gold prices are going to rise futher.
US Dollar Index and gold prices have an inverse correlation meaning when one rises, the other falls. This makes the combination of gold trading and forex trading highly profitable. Most of the currency trading involves US Dollar on with side either as a base currency or a counter currency. Since Gold and Dollar are inversely correlated, this combination hedges your risk.
Another commodity that is expected to skyrocket in the near future is silver. Just like gold, supply of silver is limited. But silver is widely used in the electronics indistry and host of other industries. With the economy coming out of recession, prices of silver are also expected to skyrocket.
What can be the best method of investing in gold and silver? You can invest in gold stocks, meaning stocks of companies that mine gold. You can also invest in Gold ETFs or some commodity ETF that includes gold in its basket of commodities. You can even trade gold futures. Futures trading is risky for those who haven't traded them before but once you learn how to trade futures the profit potential is immense. Combine gold trading with forex trading and reap a windfall!
by: Ahmad Hassam
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