Investing in you Future Part 1 of 2

Gold is the most admired precious metal in which people invest. It is a safe-haven against any financial, political, social or currency-based crises, such as: investment market declines, currency failure, inflation, war and social disorder.

Influence on gold price:
The day price of gold is driven by supply and demand. Since most of the gold ever mined still exists and is potentially able to come on to the marketplace for the right price, unlike most other commodities, the signpost and disposal plays a much bigger role in upsetting the price. At the end of 2006, it was estimated that all the gold ever mined totaled 158,000 tons.

Known the gigantic quantity of stored gold, compared to the annual production, the price of gold is primarily affected by changes in sentiment, rather than changes in annual production.

In times of public crisis, people fear that their assets may be seized and that the currency could become worthless. They see gold as a solid asset which will always buy food or transportation. Hence in times of great uncertainty, particularly when war is feared, the demand pro gold rises.

As dollars were fully convertible into gold, both were regarded as money. However, generally people preferred to carry around paper banknotes rather than the somewhat heavier and less dividable gold coins. If people feared their bank would fail, a bank run might have been the answer. This is what happened in the USA during the Great Depression of the 1930s, leading President Roosevelt to impose a national emergency and to proscribe the ownership of gold by US citizens.

If the return on bonds, equities and real estate is not adequately compensating for venture and inflation then the demand for gold and other alternative savings such as commodities increases. An example of this is the period of Stagflation that occurred during the 1970s and which led to an economic bubble forming in precious metals.

The system held up until 1971 Nixon Shock, As the US stopped the complete convertibility of the United States dollar to gold. Since 1968 the usual benchmark for the price of gold is known as the London Gold Fixing, a twice-daily (telephone) engagement of representatives from five bullion-trading firms. Furthermore, there is keen gold trading based on the intra-day spot price derived from gold-trading markets around the world as they open and close during the day.

All through history gold has often been used as money and, instead of quoting the gold price , all other commodities were measured in gold. After World War II a gold standard was established following the 1946 Bretton Woods talks, fixing the gold price at $35 per troy ounce.

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Investing in your Future

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The Gold Fixing, or the London Gold Fixing or Gold Fix, is the procedure by which the price of gold price of gold is set on the London market by the five members of the London Gold Pool. It is designed to fix a price for settling contracts among members of the London bullion market, but, informally, the Gold Fixing provides a familiar rate that is used as a benchmark for pricing the majority of gold products all over the world's markets.

The gold price fix takes place twice daily at 10.30am and 3pm, London time.

The original fixing took place on September 12, 1919 amongst the five principal gold bullion traders and refiners of the day. The price of gold at that time was four pounds 18 shillings and ninepence per troy ounce.

Due to government controls and war emergencies, the London Gold Fixing was poised between 1939 and 1954.
price of gold are fixed in United States dollars (USD), Pound sterling (GBP) and European Euros (EUR).

Historically, the Fixing took place twice daily at the City offices of N M Rothschild & Sons in St Swithin's Lane, but since May 5 2004 it takes place by telephone. In April 2004, N M Rothschild & Sons announced so as to it intended to withdraw from gold trading and from the London Gold Fixing. Barclays Bank took its place from 7 June 2004, and the chairmanship of the encounter, formerly held permanently by Rothschilds, currently rotates annually.

On January 21 1980 the Gold Fixing reached the price of $850, a figure which was not overtaken until January 3 2008. This is when a new record of $865.35 per troy ounce was set in the morning Fixing. However, with inflation, the 1980 high would be equal to a price of $2398.21 in 2007 dollars. So, the 1980 record still holds in real conditions.

While gold is traded in markets all over the world, the market is essentially homogeneous since the gold price is always in dollars and the gold traded is "loco London" (gold deliverable in London and meeting London trading standards). The London PM fix is normally considered the main reference price for the day and is the price most often used in contracts. The price of gold is quoted in USD per troy ounce.
Since May 2004 it has been conducted by telephone. The chairman begins with a 'trying' price. The five fixing members' representatives relay the price to their dealing quarters. And these are in contact with other dealers. The market members then announce how much gold they are prepared to buy or sell at that price. The dealers, who are in contact with their clients, could change their order or add to it or cancel it at any time; the view declared by the dealers is the net position outstanding among all their clients. (If one is buying two tonnes and another is selling one tonne, then he declares himself a buyer of one tonne.) If more gold is required than is offered, then the price will be adjusted upwards (and vice versa) until equilibrium is reached. At this point the gold price is fixed. On very rare occasions the price will be fixed when there is disequilibrium, at the discretion of the chairman of the fix.
A tradition of the London Gold Fixing was that participants might raise a small Union Flag on their desk to pause proceedings. Under the telephone fixing system, participants can register a pause by saying the word "flag", and the chair ends the meeting with the phrase "There are no flags, and we're fixed".

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Forex Currency Exchange Market

Trading successfully is by no means a plain matter. It requires time, market expertise and market understanding and a generous amount of self restraint. FD does not manage accounts, nor does it give market advice, that is the job of money managers and introducing brokers.

This will also determine what chart period you're looking at. If you trade many times a day, there's no point basing your technical analysis on a daily graph, you'll probably famine to analyse 30 minute or hour graphs. Additionally it is valuable to know the atypical time periods as various financial centers enter and exit the market as this creates more or less volatility and liquidity and can influence market engagements.

Time your trade:
You can be appropriate about a potential market movement but be too early or too late when you enter the trade. Timing considerations are twofold, a predictable market stature like CPI, retail sales or a federal reserve decision can consolidate a movement that's already underway. Timing your move means knowing what's estimated and taking into account all considerations previous to trading. Technical analysis can help you identify when and at what price a move could occur. We will look at technical analysis in more detail later.

If in doubt, stay out:
If you're unsure about a trade and find you're hesitating, stay on the sidelines.

Trade rational transaction sizes:
Margin trading allows the fx trader a very large amount of leverage, trading at full margin faculty can make for some very large profits or losses on an account. Scaling your trades so that you may re-enter the market or make transactions on other currencies is commonly wiser. In short, don't trade amounts that can potentially wipe you out and don't put all your eggs in one basket. ACM offers the same rates regardless of transaction sizes so a customer has nothing to lose by opening small.

Gauge market sentiment:
Market sentiment is what the majority of the market is perceived to be feeling about the market and therefore what it is doing or will do. This is basically about trend. You may have heard the term 'the trend is your friend', this basically means that if you're in the right direction with a great trend you will make thriving trades. This of course is very simplistic, a trend is competent of setback at any time. Technical and fundamental data can indicate however if the trend has begun long ago and if it is strong or weak.

Market expectation:
Market expectation relates to what most people are expecting as far as imminent news is concerned. If people are expecting an interest rate to rise and it does, then there usually will not be much of a movement as the information will already have been 'discounted' by the market, then again if the adverse happens, markets will mostly react violently.

Aid what other traders use:
In a textbook world, every trader would be looking at a 14 day RSI and making trading decisions based on that. If that was the case, when RSI would go under the 30 level, all would buy and by consequence the price would rise. Needless to say, the world is not exact and not all market participants stay on the same technical indicators, draw the same trend lines and identify the same support & resistance levels. The splendid diversity of opinions and techniques used translates frankly into price diversity. Traders however have a tendency to use a limited variety of technical tools. The most common are 9 and 14 day RSI, obvious trend lines and support levels, fibonnacci retracement, MACD and 9, 20 & 40 day exponential moving averages. The closer you dig up to what most traders are looking at, the more precise your estimations will be. The logic for this is simple arithmetic, larger numbers of buyers than sellers at a particular price will move the market up from that price and vice-versa.

Information, charts or examples contained in this lesson are for illustration and educational purposes only. It should not be considered as advice or a recommendation to buy or sell any security or financial instrument. We do not and cannot offer investment advice.

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