There is no big secret that gold has played a major role in the development of technology and civilization as we know it. The periodic and forex symbols for gold (AU and XAU) are derived from the Latin words aurum and Aurora. Aurum means “glowing” or “shining dawn” while Aurora is a Goddess of the Dawn. The importance of gold stretches thousands of years into the history of man. It is sought after for its beauty and modern usefulness regardless of its value. Why should you learn to trade gold?
1. Gold does not have to be tied to a currency or commodity to be valuable.
Gold falls at the perfect sweet spot to be used as a standard. It’s not too hard or easy to find so there is a fair amount of supply. It is malleable with an easy to reach melting point for easy conversion to other forms and storage. Gold is accepted about anywhere in the world. Germany’s pre-World War II economic crash made their paper currency completely worthless. The German government was able to move forward by using gold stores to make purchases. Gold will be an important partner to man for many years to come.
2. Gold exhibits more stability in extreme circumstances than other commodities.
A quick glance at the XAUUSD chart shows a long-term Bearish trend in which gold has descended from previously known $1900 highs. People that want to learn to trade gold may not realize that this is actually the normal course for currencies and certain commodities. Nothing ever goes one direction forever. That $1900 high was an extreme, overbought condition which eventually kicked off into a consistent downtrend. Gold is very consistent regardless of direction unlike currencies which can whipsaw on just a single news announcement.
3. Trading the XAUUSD lets you be involved in gold trading without physically having it.
It’s no secret that gold is viewed as a safe haven, albeit one that has been in a down trend for some time. If you learn to trade gold through a pair like the XAUUSD then you can profit from up and down movements. A person that exchanges physical dollars for physical gold is only going to profit if that gold gains in value. However, the electronic trader can speculate that the United States Dollar is going to gain strength against gold allowing the trader to profit from the downward movement. A trader that thinks gold value is ready to go the other direction can speculate that gold will gain versus the dollar.
4. Gold as a metal has several industrial uses to help drive value.
Quite a few people ranging from investors to those who want to learn to trade gold overlook the fact that gold does have important industrial uses. In our society today, electronics are an all important part of our lives. Gold is considered to be the best solid conductor of electricity with a high degree of precision. It is used for very sensitive electronics that may be exposed to a variety of environments. Gold connectors are common in spacecraft because the malleability of gold allows it to flex without breaking like copper would. The removal of gold from the supply helps with demand.