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GOLD AS AN INVESTMENT

gold-price

Investment in gold

Gold is one of the oldest investment instruments. Many people prefer to invest and keep their funds in the form of gold. The central banks of countries and the IMF (International Monetary Fund) are key players in the market of gold. They have about 20% of world stocks of gold in their vaults. Purchase and sale of gold from these institutions is a major driving force which affects its price.

 

The Washington Agreement on Gold was signed in 1999. This agreement obliges its members to limit their sales to no more than 400 tones annually and subsequently the limit is increased to 500 tones. By this measure is intended to be somewhat stabilized the prices. Investing in gold is a conservative instrument and can not be expected neither particularly high nor quick profits. It is however accepted that the precious metal protects the investment against inflation and fluctuations in the currency and stock market. Gold is an insurance against currency risks.

Gold prices

In the Middle Ages the gold price reached to $3000(in real terms today) per troy ounce of gold.The value of the precious metal fell sharply to $ 550 when Spanish sailors carried gold from America to the European market. The value maintains around this price for three centuries. In the early 80's, at the height of the liquidity crisis in the U.S., for a short period the price reached $ 800 per troy ounce of gold. After reaching $ 850 per troy ounce in the Soviet invasion of Afghanistan in 1980, gold fell by about two-thirds over the next two decades. Over the past 10 years investing in gold provided a great return to their owners. Prices in March 2008 exceeded $ 1000 per troy ounce of gold (31.1 grams) and in November 2009 the prices are close to 1200 dollars.

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