Gold trading remains to be the trading instrument of choice despite the popularity of the currency market and investments in other precious metals like silver or platinum. Trading in Gold has a long and colorful history that started way back in the ancient times. Wars have been fought and countries conquered over this precious metal. One of the earliest examples of using Gold in trade is during the Byzantine Empire, where pieces of Gold called Byzant, was used as currency, through Gold trading. Civilizations all over the world recognize Gold’s value and are seen to possess wealth and social status when heavily participating in Gold trading.
History of Gold Trading
For the longest time, most countries used the Gold standard as the basis of their currency. The British West Indies was one of the first regions to adapt the Gold standard in the 1700s. The Gold standard was then used throughout Europe and Australia but it was only standardized and made official in the 1870s. But by the 1890s, political instabilities and the increasing popularity of paper based currencies had made the Gold standard and Gold trading less popular in industrialized countries.
The Bretton Woods agreement played a major role on how Gold trading is performed today. When the Bretton Woods agreement was signed, it was with the intention of managing and stabilizing the International Forex market. This agreement stated the countries must set their currencies against the US dollar and an equal rate of Gold. This agreement made the United States the economic power that it is today and set the trading price of Gold trading in US dollars. That’s why Gold, silver, and other commodities can only be traded against the US dollar.
Gold trading, however, is still the commodity of choice of most traders. Despite the presence of more precious metals like platinum and the currency trading, Gold trading remains a popular option among traders. Gold trading, like any other investment, is influenced by supply and demand and is subject to a certain amount of volatility. But unlike other investments, Gold saving contributes more to the price of Gold than the actual consumption of goods. It is just one attribute of Gold that makes it an attractive investment.
Quick Facts on Gold Trading
- Gold trading is recognized in every country in the world, regardless of currency. Wherever you want to start Gold trading, its value will be recognized anywhere in the world.
- Gold trading is rarely affected by the volatilities of the currency market or political and social unrest. For the most part, the price of Gold is stable and influenced mainly by market factors.
- Gold trading is especially attractive for investors who want a stable commodity. In addition to being less volatile, the demand for Gold is constantly increasing. Gold still maintains that image of wealth and power. So having a Gold trading account almost ensures the trader a flourishing account.
- Gold trading is rarely affected by the changes in the market. Although the Gold market is constantly changing and its prices fluctuate, the risk for price inflation is lower. In fact, Gold trading can be used to balance the profit and loss in the volatile US dollar market.
- Gold trading in often considered as a strong long term investment. There’s always a demand for Gold; more so during times of political unrest and economic inflation. It’s during these times that countries buy and store Gold, increasing demand, raising Gold prices and keeping its purchasing power.
- Compared to other trading instruments, Gold trading is very liquid compared to other forms of trading. Gold is easy to purchase, to sell and trade compared to most commodities and some currencies.
- Gold trading is now easier to get into than ever before. In addition to buying Gold in the form of Gold bars, coins and jewelry; Gold can also be purchased in the form of futures, options, Gold certificates and exchange traded funds. Gold trading can even performed online through Forex brokers.
- Compared to other commodities, Gold doesn’t demand a lot of attention. Gold trading is relatively safe and stable, so it doesn’t take much of a traders’ time. With online Gold trading, investors can get real time commodity quotes and live charting services anytime, anywhere in the world.