Why Gold Trading Is The Safest Instrument in Forex

how to trade goldGold is one of the most traded commodities in the world along with Silver and Oil. Let us look a bit into the history and the essence of gold’s importance for the world’s economy.
Looking at the prices on gold during the last years you can see that they are changing all the time. Though it is not the price of gold that is changing, it is the price of money against gold moves up and down. Virtually the gold price remains stable for many centuries though the quantity of money you need to buy gold changes from time to time.

The reason why mankind has chosen gold is very simple. First of all gold is a tough material that cannot be damaged by corrosion and may preserve its qualities eternally. The second factor is in the nature of gold – it is rare and difficult to find.

Historically it started a long time ago when gold was used as money. The money was made of gold and other precious metals like silver. But it was a time of completely different money and economy. With the development of civilization, the world’s economy and money has changed too, though the gold value still stayed the same.

You may ask why there are so many cases of countries’ bankruptcy, inflation and economical crisis if the quantity of existing money is equal to the gold. The reason is that the world economists wish to raise the value of the money and the ways they used to do so cause all kinds of economical disasters where common people suffer. Instead of stabilizing the economic situation of the country by increasing the gold stocks, economists choose the path of inflation releasing more money. As a result all becomes expensive and people don’t have enough money to buy things. Money depreciates more and more and all this leads to poverty and chaos.

Currently there is so much money in the world, that it is impossible to equate it to the rate of gold, because it would increase the price of gold in a million times. For that reason such actions as inflation is necessary to do in order to keep the stability of the world economy.

The appearance of electronic money changed the situation. Banks have a lot of virtual accounts that are not secured by any gold reserve. So we can say that the present price of gold has being deliberately significantly diminished.

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  1. […] one of the most popular and important currency pair EUR/USD. There is a high probability that Gold is following the price movements of EUR/USD in a small time frame charts. Typically the repetition […]

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