Gold continues to be a fantastic store of value against fiat currencies and potentially volatile global markets. One needs to look no further than the burgeoning gold trade at the Dubai Gold Souk in the UAE public marketplace where gold sales are flourishing.
So, what are the advantages of buying gold and trading it in the markets? How and where do Gold markets operate? How can one trade gold on Olymp Trade?
These are all very good questions, so let’s address one at a time.
Advantages of Buying and Trading Gold
Gold is one of the oldest forms of currency mankind has ever known and for many reasons, but most importantly it is still considered a safe store of value regardless of the domination of paper currencies. What does that mean?
Essentially, a safe store of value means that if a paper currency begins to lose value or the world has a serious economic shock, gold is expected to hold its value as a tradeable asset. This means that people that own gold will still maintain wealth even if their local currency loses value.
In the event of a serious economic downturn in a country, those citizens that hold gold will still be able to purchase goods at reasonable prices regardless of local situations like hyper-inflation.
A good example of this is currently being demonstrated with the increasing strength of the dollar against foreign currencies. Take a look at Turkey and Syria where their local currencies have lost significant value making it harder for those countries to import goods at reasonable prices. Those people that hold gold are able to trade for those essential goods despite the current financial climate in their country.
With the price of oil continuing to struggle to maintain current levels and the Saudi Aramco IPO, gold has become a popular asset in the KSA as well in order to hedge against any negative economic ramifications.
Even when economies are doing well, wealthy investors and financial institutions often stock up on gold as a “rainy day fund” of sorts since they know that economic cycles eventually slow and then reverse. When and if this happens, they are then holding a valuable commodity that will usually rise significantly in value.
2019 is a great example of gold increasing in value despite a strong American economy as gold prices rose by 20% last year and trading of the asset continues to increase in volume. Take a look at the chart below showing gold’s performance for the last year.
How and Where is Gold Traded?
Two major exchanges handle the majority of gold transactions for trading: The Chicago Mercantile Exchange, which operates in Chicago and New York City and the London Mercantile Exchange. The current price of gold is based on price action in these two markets for the most part.
Both of these entities regulate and verify actual gold stores and maintain large inventories of the precious metal for buyers as well as facilitate the physical exchange of the metal when it takes place.
Many trading platforms and brokers offer traders the ability to access these markets online and in person.
How to Trade Gold on Olymp Trade
Trading gold is available on both the Olymp Trade platform and with the MT4 platform and trading is also available on both the Forex and Fixed Time trading sides of the Olymp Trade platform providing increased flexibility for Olymp Trade clients.
When trading gold using the Fixed Time Trading side of the platform, the returns will vary based on the current market situation from 10% up to 92% depending on your trading level on Olymp Trade. For day traders and other short term investors, trading gold on the Fixed Time Trading side can be extremely profitable since the commodity experiences a great deal of price movement throughout the trading day.
On the Forex side of the platform, gold traders can benefit from Olymp Trade’s x50 multiplier, which helps secure increased profits from positions opened by clients.
Furthermore, the Forex side allows for carry over of open positions (overnight swaps) in gold so investors can take Buy and Sell positions for long-term trading plays. Combined with the Take Profit and Stop Loss tools provided by Olymp Trade, this can add up to extremely profitable positions on gold since it holds trends for extended periods of time.
For traders that can’t utilize the multipliers or the swap features due to religious reasons, trades can be conducted without the use of the multiplier and they can be closed out daily in order to remain halal.
Serious investors usually have a portion of their portfolio in gold or other stored value assets, and there is a reason why wealthy individuals, trading houses, and even governments stock up on the precious metal. Gold has proven to be a reliable and safe way to protect your savings and hedge against financial disaster.
However, even if you don’t have a large nest egg of money saved, gold can be an extremely profitable asset to trade in the short and long term since its consistent performance allows for the application of good trading strategies and great profits.