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Gold Ebook (6490)
Gold Ebook (6490)
INTRODUCTION TO GOLD
EBOOK
Table of Contents
• Introductory Facts • Making sense of Value
• Charting Gold… 1990 to Present • Factors that affect the Gold Price
• Trading as CFD’s
• Medicine
• Industry
• Electronics
Monetary Exchange
Gold has been widely used throughout A World recognized asset
the world as money, for efficient indi-
rect exchange and to store wealth in “Financial Insurance” during a rough
hoards. For exchange purposes, mints economy
produce standardized gold bullion
coins, bars and other units of fixed Protection from inflation
weight and purity.
Gold ETFs are a quick and easy way to Users of Gold ETFs tend to use them
gain exposure to gold providers includ- more as a shor t-term play.
ing iShares and ETF Securities offer Gold averaged $1 794/oz in the first
these listed tracker funds. Shares can be quarter 2021, down 4% from the previ-
bought and sold daily and the funds are ous three months, but still about 13%
backed by physical gold, unlike other above the level seen over the same peri-
exchange-traded commodities which od of last year.
tend to track futures contracts. Annual
management fees are about 0.4 per
cent.
ETF Worldwide Holdings
What influences the Gold Price?
The price of Gold tends to increase in
times of crisis such as war and natural
disasters.
Gold has a history of maintaining and in- Central banks continue to add to their
creasing it’s value. It has appreciated and bullion reserves.
survived every single human event since
1968 and continues to hold it’s value. Proven hedge against inflation.
What will the next 10 years look like? Safe haven during times of uncertainty.
Charting Gold 2021
Despite Gold losing value in the first
quarter of 2021, in recent weeks we
have seen a significant bullish movement
aligning the short and longer term trends.
$1900.87
The quoted price means that you could
BUY or SELL Gold for $1900.87 per
ounce.
If you were a buyer at $1900.87 and If you were a seller at $1900.87 and
price moved up to $1901.87 it would price moved up to $1899.87 it would
mean that you would earn $1 for every mean that you would earn $1 for every
contract that you had bought at contract that you had sold.
$1900.87
Making Sense of Contracts
Now that we’ve looked at the value of Let us use an example:
Gold spot, let’s look at how you see the
value of your risk and potential profit. The price of XAU/USD is trading at
$1900 and we decide to BUY at Market
You can buy XAU/USD (Gold Spot) in with a Stop Loss at $1895. We also set
contracts, but to make it easier, we will a Take Profit target at $1910.50.
be looking at pip value!
In pip terms we have:
For a 10c price move on the Gold chart,
your position will essentially move 1 pip. Stop Loss = 50pips ($5.00)
Take Profit = 105pips ($10.50)
10c 1 pip
$1 10 pips
$10 100 pips
$100 1000pips
Making Sense of Contracts
Let’s now look at an example to deter- In terms of pips, this equates to 98.6 pips
mine the risk and reward of a particular risk for 662.1 pips reward.
trade:
Entry: $1773.29
Stop Loss: $1763.43 ($9.86 risk per/contract)
Take Profit: $1835.50 ($62.20 reward per contract)
The Power of Risk/Reward
The current average daily range fill of
the XAU/USD is around 127 pips or
$12.70.
XAU/USD
XAU/AUD
XAU/ZAR
This gives us many opportunities to trade
XAU/EUR Gold in multiple pairings.
XAU/JPY
Volatility and Options
Always be aware of Volatility Make sure you watch securities that may
affect the Gold price.
Look at the Calls & Puts in the market
This includes the daily gold price itself
Higher Volatility means bigger moves in relation to the other precious metals,
Gold Options & expirations, Gold
Bigger profits Forwards, Gold Futures.
The London Gold Fix
The gold fixing provides a recognized
rate that is used as a benchmark for
pricing the majority of gold products and
derivatives throughout the entire world’s
markets.
Inflation Rates
Government Reserves
Import Duty
Currency Fluctuations
Global Economy
War
Factsheet
The biggest nugget that has ever been When Franklin Roosevelt raised the price of
found was dug up in Australia and weighed gold from $20.67 to $35 in 1934, the dollar
approximately 90 kg. immediately lost 40% of it’s value.
Drinking molten gold mixed with crushed Around 161,000 tons of gold have been
emeralds was used as a treatment for the mined by man.
bubonic plaque during the 14th Century.
Switzerland was the last country whose cur-
In ancient Egypt, gold was considered the skin rency was tied to gold. 40% of a Swiss Franc
of the gods, particularly the Egyptian sun was backed by gold until Switzerland joined
god Ra. Only the pharaohs had access to the IMF in 1999.
Gold. Only later the chambers that held the
king’s sarcophagus was know as the House of South Africa happens to be the place where
Gold. two thirds of the gold comes from.
Over 400 references to gold are found in the India is the world’s largest consumer of gold
Bible, such as the instructions from God to today.
cover furniture in the tabernacle with Pure
Gold. Gold is also mentioned as one of the
gifts of the Magi.
Closing Statement
This document should bring you up to speed with an overall view of the Gold Market and how it works. The intention was not to spend a lot of time on
any one thing, but to educate you enough to hopefully protect yourself. If you have any questions, or think we should add something to the
document, please contact us through the website www.forexvarsity.com and make a suggestion.
And always remember, the number one rule for successful traders…
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