There are several methods you can profit from gold, as a trader. First, you can buy physical gold and wait for its price to move up. Second, you can buy stocks of the companies that produce the gold. Third, you can buy an Exchange Trade Fund (ETF) that tracks the gold price. Finally, you can use online brokers such as easyMarkets to buy and short gold using a contract for difference (CFD).

A common question among new traders is the relevance of gold and why it is valuable to investors. They are right to ask this question, because unlike other commodities, gold does not have a major use. Of all the gold that is mined, only a small percentage of it is used for industrial purposes.

To understand why gold is a valuable metal, it is important to look at a historical perspective. In the past, gold was used as a currency and as an important metal. In the 18^th and 19^th century, countries pegged their local currencies to gold. During World War One, Germany and United Kingdom abandoned the gold standard because they didn’t have enough of it to fund the war.

After World War Two, the Bretton Woods agreement came into effect. In this system, many countries pegged their local currencies to gold. This changed in 1971, when Richard Nixon unpegged the US dollar to gold. This led to a sharp rally in gold, with its price rising from about $35 to more than $120 within a few months.

Today, gold is viewed by many traders firstly as a safe haven, in case of a recession or global uncertainty. However, this belief refuted by some experts who argue that gold price tends to fall during recessions. Second, traders view gold as a hedge against inflation. Others argue that gold is important because it would be a useful asset in case of an apocalypse or a major catastrophic event. But these theories are also argued against by some experts.

So with these differing viewpoints, how should you trade gold? A good way to trade gold is to compare it to USD. This is because gold is usually quoted in dollar terms. So when USD gains, gold often declines. And if USD falls, gold tends to decline. The chart below shows the movement of gold price vs the dollar index in the past five years. The dollar index compares the value of the USD with its major global peers such as Yen, Euro, and Sterling.

Therefore, you should look at gold in conjunction with USD. For example, if the Federal Reserve starts raising interest rates, the common implication is that the USD will strengthen. The same is true if there is a stream of positive economic data from the US. This will lead to a gain for USD and a decline for the gold.

For quantitative purposes, you can perform a correlation analysis for gold and the dollar index. To do this, you should take a specific period based on your trading style and download the data. Then, you should run a correlation analysis in Excel or a similar tool. If the correlation is close to minus 1, it will mean that the two are inversely correlated. With this data, you can then do an arbitrage or pairs trade.

Technical analysis too, can help you trade gold. By using the technical indicators such as moving averages, Relative Strength Index, MACD, and Stochastics, it is possible for you to trade gold. If you are a beginner, you should take time to learn how these indicators work. Then, you should apply them to gold charts in a practice account before moving to a real account.

Trading gold online: an introduction is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Precious, precious gold bullion is a fantastic investment, but there is the odd seller out there who would happily take advantage of somebody’s ignorance when buying. So if you’re in the market for gold bullion, why not read over these few easy tests you can use on the go to check the authenticity of the item, lest you get sold down the river by a savvy con-artist.

Check the density

Gold and silver are by far some of the densest metals around, which makes for a relatively easy test. If you have an item of relative size, you can compare their weight to get a pretty good idea of whether or not the item is a fake.

Another way to test the density is to drop the item in a glass of water; gold should sink immediately because of its density. If you are buying from a private dealer and things seem a little fishy, ask yourself why they wouldn’t sell gold bullion in Melbourne to trusted buyers, if things don’t add up then just walk away.

Is it magnetic?

Gold is not at all conductive, so carry a magnet with you when you go to test the item. Since bullion should be as pure as you can get, there should be no magnetic materials in the item.

If it turns out to be magnetic, you know that someone is trying to take you for a fool. This is handy when buying large bars of the metal, since it is fairly easy to drill into them and replace the precious insides with an imposter that would never otherwise be noticed, imposters which are usually magnetic.

Does it discolour your skin?

Pure gold should have no effect on the skin, unlike other metals like brass or copper which cause a discolouring or green stains. This is similar to performing an acid test (if you have a kit) which when applied sparingly to the gold would go green if it is fake. Contact us at www.goldbuyersmelbourne.com.au for more information on acquiring an acid testing kit to find out for yourself.

Grooves and relief

When it comes to coins of bullion, the grooves on the edges and the amount of relief on the coin can tell you a lot. Relief refers to the indentation of the markings on the metal. If the bullion is authentic then the coins should stack up neatly, unhindered by the embossed surface.

Considering how difficult this is to replicate, fakes often won’t stack comfortably due to the high rise of the etchings.

Keep an ear out

The ping test, as it is often called is also a good way to tell if your bullion is fake. Tapping on the gold with a metallic object should cause the bar or coin to chime, again due to the density. Regular metals often sound very dull when they are tapped in comparison to gold and silver which should ring like a bell.

If you aren’t musically impressed by the piece, then it is very likely that other metals within it are causing the dull sound, and it therefore is not bullion.

Have the item appraised

The only way to tell for certain would be to take the item to a dealer that you can trust. Their expertise, equipment and experience make for the surest of assessments. It is best not to take your seller’s word for it, and if they won’t trust you enough to allow you to take the item for an appraisal, then there is no reason for you to trust them enough to buy from them.

For added peace of mind, conduct more than just one of these tests on the item, and the latter one, taking it for an appraisal should definitely be considered before you hand over your hard earned cash. There’s no point in rushing into something like this, bullion costs a lot of money, and you can be sure there will be no exchanges if you have been cheated.

How to Tell If You’re Buying Fake Gold is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

• Pawn Shops
• Jewelry Stores
• Gold Merchants
• Private Sale
• Auction Websites

Pawn Shops

No matter where you go in the world, a common sight is the pawn shop. A pawn shop will buy, sell, and also lend money, using an item as collateral. Most pawn shops will have a wide variety of different items on offer.

Most communities have a local pawn shop, so it can be a quick and easy way to get some cash when you need it. Whether you are looking to sell gold bars or gold jewelry, most pawn shops will offer you the market price for the gold, and then deduct a commission.

Jewelry Stores

Another common sight that you see all over the world is jewelry stores. Although a jewelry store might not advertise the service, most independent stores are willing to buy gold that they can use to create their jewelry.

A jewelry store will also offer you the market price for the gold, and you may even find that they will not charge you a commission. Although, this will depend on the individual store and you are most likely to get the best deal from one that is independent and not part of a chain.

Gold Merchants

Gold Merchants such as Gold Buyers in Melbourne specialize in the buying and selling of gold and other precious metals. These types of companies buy and sell gold every day, as well as other metals, so they will often give you an extremely fair price, although they will deduct a commission.

If you have any other precious metals such as platinum, silver, palladium, you will also be able to sell these here and cash in on your investment.

Private Sale

If you are not selling plain gold but selling gold jewelry, then this is probably the best way to get the most for your items.

Often when you sell gold jewelry to businesses, they will only give you the scrap value of the gold. They also offer scrap value for any other precious metals and stones that you are trying to sell, and the price offered is often a lot less that what you paid for it.

Selling your jewelry in a private sale may mean that the buyer is willing to spend more money as they like the aesthetic qualities of the piece of jewelry. This option is not always the best if you are looking for a quick sale, as it can sometimes take quite some time before you can find a buyer willing to pay the price that you want.

Auction Websites

Auction websites have the convenience that you can sell your gold without having to leave the house. However, you do have to be careful as there are not only a lot of rogue operators on auction websites, you may not get as much for your precious metals as you wanted.

If you are going to use the services of an auction website, then you will need to use one that lets you set a reserve price so that you get a fair price. Most websites like this use services such a PayPal, and the commission that they charge may be more than a Gold Merchants or pawn shop.

Finding the Best Way to Sell Your Gold is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.