Gold trading has seen unprecedented growth in recent years. April 27th saw a new record for the value of gold: $1538.35 an ounce. So why the sudden surge in popularity? Traders tend to buy up gold when confidence is low in traditionally strong currencies, especially the US dollar.
Why is gold trading popular during times of uncertainty?
On a long enough timeline no currency is completely secure. Economic recession, natural disasters and war are just some of the factors that might cause a currency to suddenly lose its value, leaving slow traders seriously short changed.
Gold on the other hand is more stable. The value of gold is not tied to the economic performance of any particular country, and as such does not fluctuate as dramatically over time and can’t fail completely. For this reason investors who are wary of Forex and don’t want to worry about their wealth being diminished, buy up large amounts of gold.
While gold is stable over long periods it’s still possible to speculate over the value of gold in the short term. For example if you think that the value of the US dollar is going to fall, then buying gold is a good strategy. Gold can affect the value of currencies in other ways, for example a rising price for gold improves the value of currencies in gold producing countries. War or natural disasters in gold producing countries can also affect supply thus driving the price of gold up.
How do I start gold trading?
In order to trade gold you need to open an account with an online brokerage. They will usually require an initial deposit before providing you with software and instructions for trading. Choose your brokerage carefully, their guidance will most likely influence your early trades heavily. Trading gold is an exciting, challenging career, so enjoy it!