Edith Bryant October 20, 2017

A lot of people choose to trade in gold in order to expand their investment portfolio. Not only is it good for diversity, but it is also safer than paper currency because it has intrinsic value, as opposed to paper currency whose value is determined and assigned by a government.

However, if you are not versed in gold trading, you may end up with less value than you originally started. This is because the value of gold fluctuates during the year, as well as on a larger scale spanning years and sometimes decades. Furthermore, different types of gold have different prices, whether it is bars or coins https://www.silverbullion.com.sg/Shop/Buy/Gold_Coins.

So, here’s a really useful and relatively simple way to know when it is time to buy and when to sell your gold.

Follow the Governments

Central banks of most nations and other entities tend to keep gold reserves in their vaults. The USA’s Fort Knox is world-famous, but most other countries have their own gold reserve. Recently, the World Gold Council issued a statement that these banks bought more gold than they have sold.

Even though you may feel like that has no importance to you, it actually drives the prices up. That means that you should wait for another situation like that and then jump onto the opportunity.

Watch the US Dollar

Whether you like it or not, gold is defined in terms of its relationship with the US dollar. During the history of international trading, there have been some trends which banking and investment experts have been able to discern. Namely, when the US dollar is strong the price of gold plummets, whereas a weaker US dollar leaves gold prices soaring.

What that means is that the strong US economy causes gold to be cheaper, so follow the value of the US dollar and the strength of the US economy. Buy gold when the US is strong, and avoid doing so when there are problems in the USA.

Political Climate

Even though the US dollar is the most important currency when it comes to gold, thepolitical situation in other countries can also affect gold prices. For instance, the UK had a significant impact on gold when it voted to leave the EU. The value of the British pound dropped in relation to the US dollar and the Euro, so investors started protecting themselves from this decline, which caused the rise of gold prices as high as $100 per ounce, and it all happened just hours after the vote was official.

Follow the political events in your country, as well as the political events in the countries that do business with your government, because the price of gold can be drastically changed in a very short time.

Gold Production

The reports show that the production of gold has been steadily declining over the past few decades. The most important factor in this equation is the fact that most mines have been depleted or nearly depleted. That means the mining for gold is going to become more expensive and more difficult, which drives the prices up.

When you combine that information with the fact that it will become a limited resource once all the reserves are completely exhausted and you can project that the gold prices will only rise.

All in all, no matter why you are thinking about investing in gold, you need to know that it is a serious investment and that you need to follow these factors in order to stay on the positive side of the investment.

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