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How to determine gold price

Introduction

The gold price is influenced by a large number of factors, but the most important of them is the general state of economy. As Rockefeller, one of the first moguls of the world said two centuries ago, “When there is blood on the streets, buy land." Well, even if the proverb must be adapted to our modern world, the principle remains the same. As we are living in a financial recession that lasts for some years, and it seems like it is going to last, people lost their trust in the classical investment options represented by stocks and real estates, so at the moment they prefer long-term investments such as gold and art. This is why the gold price can only grow. You won’t have to believe our word for this, as you just need to see the charts for gold price during the last four years. Once thing is certain, the tendency of gold price will remain the same, and until the people gain back their trust in stocks and real estates, it will not change.

Step 1

This is why the gold price can only grow. You won’t have to believe our word for this, as you just need to see the charts for gold price during the last four years. Once thing is certain. The tendency of gold price will remain the same, and until the people would gain trust in stocks and real estates, it will be the same.

Step 2

The gold price is not only attractive for the investors that want to preserve the value of their savings, but also for speculators. However, as all the investors know that the gold price will go up, the only effective manner to win from those transactions is to use the futures options. We are talking about some complicated financial instruments that are available for people with many financial resources.

Step 3

However, this does not mean that the private investors with limited resources are not able to profit from the rising gold price. You must contact a bank that offers those services, and to sign a contract with them. You won’t be able to win so much money as expected, but you will be able to win about 40 % of your investment every year. Many people are wondering about this impressive evolution and what would happen next.

Step 4

It was also observed that the gold price reacts strongly to the dollar quotations in the short term. You can speculate the different announcements made by the American Government and of the Federal Reserve in your favor, but this means to have an account opened with one of the Forex traders that allow trading the pair gold/USD or USD/gold. This way, you will be able to use the gold price in the intra-day transactions for some good profits.

Step 5

In the market of gold, the major international banks are always implied. The majority of gold transactions are made by those banks, and this is not good news for the private investor. Practically, there is no method to identify those transactions, but they have an influence over the gold price. In fact, for the first time since 1990, the national banks became net gold buyers.

Tips

Starting with 1989, the banks sold their gold massively, with the purpose of sustaining a strong dollar. This is why the price of gold had fallen dramatically, and the gold price became unattractive for the investors. However, starting with 2001, the year when the first signs of the financial recession appeared, the gold price started to grow rapidly until today.

By Stanculescu Mihai Bogdan, published at 02/23/2012
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