Three Myths About Trading Debunked
Are you interested in trading gold online? Have you told your friends and family, even your colleagues? If so, they may have some objections to you trading gold—which we are happy to defeat. Below are three popular objections to gold trading—and the reasons they may not be concerning.
Gold is just a safe haven that you only buy if you think the end of the world is imminent. It is true that historically, gold has been considered a safe haven in times of economic, geopolitical and financial instability. Inflation and currency devaluation are also positive environments for gold, because it holds its value. As a result, gold tends to rise in times of economic crisis. But that does not mean gold traders cannot make money trading gold in other times as well: Gold futures and gold options, as well as spot gold, can be traded long or short, meaning gold traders can profit when gold prices rise or fall.
Gold is worthless because it is not a true commodity. Gold may not be a true commodity, but dramatic changes in the price of gold have little to do with its value as a commodity: Gold traders make money on dramatic changes in the price of gold, not its value as a commodity. In fact, gold traders often consider gold more like a currency than a commodity. Spot gold, for example, trades on forex platforms along with many of the world’s currencies.
Gold is only worth trading in times of inflation. As we mentioned earlier, inflation and currency devaluation are positive environments for gold, because it holds its value. But experienced gold traders know gold has also risen in value in during periods of deflation and disinflation as well. Certainly, gold prices did decline in value during one notable period of disinflation in the 1980s. But gold prices have also risen during deflationary periods, particularly during multi-year boom-and-bust credit cycles.
The lesson: Learn more about trading gold before you get too concerned about popular objections. Experienced gold traders know gold is more like a currency than a commodity, and successfully trade gold in many economic and market environments.