| Updated: October 30, 2024
Hello there, this is tradingpedia.com and we wrap-up the series dedicated to gold as seen through the eyes of a retail trader.
Overview
We started explaining why gold is a commodity and how come that it is an alternative investment. Also, it is a hedge against inflation and used mainly to obtain diversification benefits. For instance, if you have stocks you add bonds for obtain diversification benefits, but you can also add gold if you have a longer time-perspective.
Gold Storage Locations
Gold Storage Locations Throughout the World comes from the investment community, households, industrial production, etc. We discussed the roles of India and China and covered ways to trade gold.
There are various ways to gain exposure to gold and we have covered this topic extensively, using many examples. Also, what goes means as a commodity?
This is one country with plenty of experience in the gold market. Gold as a commodity depends on the supply and demand levels. Therefore, the AUDUSD price depends on the price of gold because commodities have a major influence on the Australian GDP. We also touched subjects like why Bitcoin is shown in the gold color and its attributes that makes it valuable.
Gold as an investment starts with jewelry and why proximity is important to physical gold owners. For instance, storing physical gold at a location near your residence or within a reasonable traveling distance, is of a high priority to many investors.
Still on this part, we discussed the role of gold in a portfolio. Technical analysis works as well – it can be used in various ways, but the main reason why people invest in gold is as a hedge against inflation.
This table is staggering, leaving little more to add. On average, in the last twenty years, gold gained 10.3% a year. These are the exchange rates in the last century and how gold performed. The chart shows what is the form of money that survived the test of time.
The historical perspective is also important, and we covered CFDs as well. By trading it, you will not actually own gold, but speculate on its volatility. ETFs are a great way to obtain exposure to the gold market without owning gold. They are just a cheaper alternative than owning shares. When you own shares, you may have other alternatives like receiving dividends, and so on.
Correlations are also important – AUDUSD, an important one for FX traders, but also the gold/silver ratio, an important one for previous metal traders.
Asia
Gold Storage Locations Throughout the World matters a lot too. Asia is a huge market for gold as Indian and Chinese households are determinant for the price of gold. Central banks keep buying gold despite the fact that the gold standard disappeared a long time ago. Finally, New Zealand, Australia and the United Arab Emirates are one of the favorite destinations for gold storage if you own physical gold.
I would like to add a few words about UAE. It has a currency pegged to the USD and the government has massive foreign reserves to deploy in the case of a financial crisis. From a governmental perspective as well, Dubai has a “pro-gold” policy that proved very attractive. For instance, it exempts precious metal investments from taxations and it also established the so-called Dubai Good Delivery (DGD) – an accreditation for gold refiners. It is a relatively new “kid in town” but Middle East is not new to the gold market.
New Zealand comes as a surprising location, but it has some impressive facilities. Also, Australia comes not only with the proper infrastructure, but also with the experience in the gold industry.
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Switzerland
We end up, of course, with Switzerland. Its neutrality is just what gold represents in the world of investment. The country is home to one of the biggest, if not the biggest gold vault in the world. Somewhere beneath these mountains in Switzerland you can find some of the largest quantities of gold ever stored.
So, people focus on finding gold, bringing it up above ground, and then put it back underground. What is up with this curious yellow metal that ended up a form of money that survived for thousands and thousands of years.
I hope you enjoyed this one as much as I did and if there are any questions, feel free to ask them.
Bye, bye.