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Gold
How should an investor really view gold? For the most part, it is a commodity, just like soybeans or oil... At the same time, gold can be seen as a form of insurance against a catastrophic event hitting the global financial markets.
Gold is traded in dollars and cents per ounce.
For example, when gold is trading at 600/ounce, the contract has a value of $60,000 (600 x 100 ounces). A trader that is long at 600 and sells at 610 will make $1,000 (610 – 600 = $10 profit, 10 x 100 ounces = $1,000). Conversely, a trader who is long at 600 and sells at 590 will lose $1,000.
The most active months traded (according to volume and open interest) are February, April, June, August, October and December and the biggest factor influencing gold's price is the staggering amount of it held by central banks around the world.
Silver
Silver and gold have shared a common history over the past five millennia. Prior to the 20th century, silver was also a monetary standard, but it has long since faded from this monetary scene and from the vaults of central banks around the world. If the current stockpile of gold were to be sold off, the downward pressure on its price could result a same fate for silver. This is why both had general up-trend movement in previous years?
Silver is traded in dollars and cents per ounce like gold.
For example, if silver is trading at $10/ounce, the 'big' contract has a value of $50,000 (5,000 ounces x $10/ounce), while the mini would be $10,000 (1,000 ounces x $10/ounce).
Gold and US Dollar Relationship
· Inverse Relationship between gold price and USD, so as gold price goes up, USD goes down or as gold goes down then USD goes up at the same time.
· The change in the price of gold can be an indicator of the direction of change in the currencies whose countries are large producers and exporters of gold (Australia, Canada)
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