Forex Currency Symbols
How does the Forex Market Gold
Gold standard ¨ ¨ is a monetary system in which values are defined as a given weight of gold. With this criterion, the issuer of the security of money with the support of the bills that amount to gold. In the past, the same was used for the marketing of commodities and trade in other currencies. Proponents of this system argue that it is more resistant to the expansion of credit and debt, and that the money supported for gold is not created arbitrarily by governments. This would prevent the artificial inflation due to the devaluation of a currency, and that supposedly removes uncertainty that currency.
But the gold standard began to show its weaknesses when an economy strengthened, and increased imports of goods and services foreigners. This goes out to the gold reserves needed to support the currency, reducing the money supply, followed by an increase in interest rates and braking activity leading to economic recession. Then, the low price of the goods would generate a massive purchase of foreign countries, reversing the process. The oscillating patterns of rise and fall continued until the outbreak of World War I interrupted the flow of the market and free movement of gold.
After both wars, Bretton Woods agreement (1944) was issued as a product of decisions made at the Monetary and Financial Conference of the United Nations, which have set standards for commercial and financial relations among the industrialized countries of the world. This was decided to create a World Bank and International Monetary Fund, and the use the dollar as an international currency, keeping its value in terms of gold to 35 dollars an ounce (then the United States had more tan 60% of reserves gold in the world). The agreement expired in 1971, and for the year 1973, the currencies of major industrialized nations began to flow more freely, controlled by supply and demand operating in the exchange market. New financial instruments appeared, the market was liberalized and free trade.
In the 80, technology has opened new frontiers and the movement of capital between countries accelerated, extending market continuum across time zones of Asia, Europe and America. Transactions in foreign exchange rocketed from about $ S per day 70 billion in the mid 80s to over $ 2.5 trillion per day, two decades later. The combination of low margin and high leverage has changed the way the interbank foreign exchange market operates. The currency exchange market, which was once exclusive to large investors and financial institutions, is now available to a single investor and not as large institutions, thanks to the Internet and brokers online, real-time transactions, and graphics.
Gold in the Forex Market
In title = "online forex"> Forex Online, the symbol for gold is XAU. The price of gold is measured by its weight, and refers to the value of dollar an ounce. Transactions in gold prices are the same way as with the currencies of two ways or OTC (Over the Counter). This means, run between two parties without the need for a third party to consolidate trade. This type of transaction was negotiated in a virtual form, not requiring the physical exchange of the goods traded, given the gold as "XAU", as if it were another currency. These transactions are only done in conjunction with the U.S. dollar (USD).
In general, when the price of gold, the dollar's value decreases. For that reason, investors operating in gold to balance their income and lost against the dollar. In addition, as gold tends to keep its purchasing power over time, investors tend to buy the currency to counter the effects of inflation and changes in the value of currencies. The purchasing power of many currencies has generally declined as a result of the impact of rising prices of products and services.
In the currency market, Some investors also buy and sell gold due to speculation, trying to reap benefits from minor fluctuations in prices. However, the price of gold is very unpredictable, which is mainly used as a store of purchasing power, and therefore is subject to many monetary and psychological factors. The short-term investment to make more profits than other types of investments can be very risky.
Because it is used as a store, the price of gold is closely linked to alternative investments as others behave, how the currencies, bonds and stocks are. The gold price tends to rise when in the midst of monetary instability and falling capital markets. Also events like wars and natural disasters affect the price. The price of gold has been increasing due to the weak dollar and the situation unstable stock market. However, its real price, adjusted for inflation, is now much lower than it was in the early 80s. In any case the trend current is increasing, as in the past five years the nominal price of gold rose to U.S. $ 330 per ounce in April 2003 U.S. $ 900 early April 2008.
Rising gold prices may affect other currencies, especially the countries with the highest production of this metal. For example, Australia is the third highest exporter of gold, and Canada is the third largest producer. Therefore, we speculate on transactions in Australian dollars and Canadian waiting be stronger as the price of gold rises.
In the forex signals market, gold is neutral, which means it is not connected to any particular country, and increases in the price of its influence transactions in various currencies. Gold prices are important catalyst in the foreign exchange market.
There are currently five major gold markets, all of whom are based outside New York, London, Zurich, Hong Kong and Sydney. Unlike stock markets, the price of gold is subject to the perception of some key corridors that communicate with each other and "adjusting" the price several times a day. This process gives more stability to the points of reference price discount because they are updated according to how the proposal and demand move. The fact that all markets are in different time zones, allows transactions 24 hours a day. The main currencies used in these transactions are the dollar and euro. Some time ago the pound sterling was the dominant currency, it is not so today.
Gold has an additional role, which purchase is intended as a reserve power. Although it can be used in production processes, the most in demand for gold comes from its use as a backup.
Reasons to invest in gold
1. Gold is not affected by inflation or devaluation. However, it loses its value daily as occurs with paper money.
In February. Gold is seen as a store of wealth. Gold has been shown to enhance their value in times of crisis or war, when alternative investments tend to fall.
3. Gold is NOT under political control. No government can influence prices.
4. Currently, the gold reserves are limited. This has a positive impact on its price, since it must increase when it is a limited resource.
5. It's an easy investment. It is an accepted worldwide currency and does not lead to change, no taxes exaggerated.
6. It is a pity and secure investment. In 2009, so far, it has a return of around 17%.
7. Its main use is for reservations. There are little gold very to the sale and which is used as a reserve, so we can expect further price increase
8. Allows various forms of investment. Bricks, certificates of deposit, futures and options on gold mutual funds.
9. Gold is seen as the better investment in times of crises. Gold is considered a liquid asset and its value always increases at this time ..
10. Do not pay VAT (Value Added Tax)
About the Author
Jack Maben is the marketing executive of forexandpips, For information about the online forex and forex signals visit at: www.forexandpips.com
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