Americans have become deep in debt in so many ways for the last 3 decades. The debt brought about by the irresponsible use of credit cards has reached a level where the United States has negative savings rating. A lot of Americans are buying so many things on credit. They buy things that they do not even use. Their debt piles up and it becomes impossible for them to pay off their debt. In the 1990s, most Americans paid for their daily living expenses with their credit cards and used their trading stocks and cash assets in the internet trade. The trend eventually ended and a lot of wealth was lost.
Credit card debt can bury you alive. As the debt grows, the interest also grows. As time passes, your debt also grows bigger. It can reach a point where the amount you are paying each month is only enough to cover the interest on your debt. It is almost impossible to pay off such a huge debt unless you win the lottery.
The nation is buried deep in national debts and deficits. Many administrations have begun programs with no funding at all. The government has also acquired weapons, aircrafts and sea vessels to modernize the armed forces but they were all acquired through credit. The debt of the nation will be passed on from generation to generation. The children of your children will grow up paying the debt that has accumulated generations before them. The only problem is that as the years go by the interest on that debt is also growing. The interest alone is adding billions of dollars to your liabilities. The government has made a useless attempt at offsetting all this by printing large quantities of money. The problem is that, the high circulation of money has lowered the value of the US dollar, making the nation even poorer.
In times of economic instability, there is one thing that remains stable and that is gold. Even as the value of the US dollar has plummeted, the value of gold has risen. If inflation is sky-high and the value of the dollar hits rock bottom, the value of gold will soar. This has been the same for thousands of years.
Instead of buying things that you do not really need, buy gold coins instead. The value of a car depreciates over time but the value of gold rises as time passes by. Buying gold is the best way that you can protect your future as well as the future of your children.
Thursday, June 9, 2011
The Basic Fundamentals Of Gold
If you plan to buy gold coins, it is important that you have a clear understanding of the gold market. The gold market is the one that mainly dictates the price and movement of gold. The specific factors that affect the price of gold are supply and demand.
The supply of gold is normally low. Gold has been mined since the ancient times which contribute to its scarcity. Another factor is that gold nuggets are not just picked up from the ground like pebbles. They have to be mined several hundred feet below the ground. Out of ten tons of ore, you can only get an ounce of gold. A lot of men have searched for their fortunes in gold but only a few have succeeded. The short supply of gold has made it even more valuable. There are gold mines all over the world but the demand for gold currently surpasses the supply that is available. The most productive mines in the world are in the United States, Russia, Australia and South Africa.
Freshly mined gold is not the sole source of the world’s gold supply. The gold that has been mined many years ago can still be used. Gold is a lasting and precious mineral. It can last forever and can be used over and over again.
One of the sources of existing gold is the official reserves of the government as well as private organizations. These gold reserves have been sold over the years and it was expected to stabilize or even lower the price of gold but that never happened. In the late 1990s, the Bank of England sold their gold reserves at $300 per ounce. After they have sold their gold reserves, the price of gold in the market more than tripled. The International Monetary Fund or the IMF sold off part of their gold reserves at the same time the Bank of England did. Financial institutions cannot even predict the right timing in selling their gold.
The supply may be low but the demand for gold has always been high. One major cause for the high demand for gold in the market is the jewellery-making industry. Gold jewellery is very much in demand in Asian countries such as China and India. Gold jewellery is not only a precious accessory in these Asian countries but they are also considered as a medium for trade. In the Western countries, gold jewellery is acquired for its value and beauty.
Gold is very strong, malleable and is an excellent conductor of electricity which is why it is used as an industrial metal. It is used in making electrical and computer parts. They are also used as lining for the cockpits of modern military aircrafts.
The supply of gold is normally low. Gold has been mined since the ancient times which contribute to its scarcity. Another factor is that gold nuggets are not just picked up from the ground like pebbles. They have to be mined several hundred feet below the ground. Out of ten tons of ore, you can only get an ounce of gold. A lot of men have searched for their fortunes in gold but only a few have succeeded. The short supply of gold has made it even more valuable. There are gold mines all over the world but the demand for gold currently surpasses the supply that is available. The most productive mines in the world are in the United States, Russia, Australia and South Africa.
Freshly mined gold is not the sole source of the world’s gold supply. The gold that has been mined many years ago can still be used. Gold is a lasting and precious mineral. It can last forever and can be used over and over again.
One of the sources of existing gold is the official reserves of the government as well as private organizations. These gold reserves have been sold over the years and it was expected to stabilize or even lower the price of gold but that never happened. In the late 1990s, the Bank of England sold their gold reserves at $300 per ounce. After they have sold their gold reserves, the price of gold in the market more than tripled. The International Monetary Fund or the IMF sold off part of their gold reserves at the same time the Bank of England did. Financial institutions cannot even predict the right timing in selling their gold.
The supply may be low but the demand for gold has always been high. One major cause for the high demand for gold in the market is the jewellery-making industry. Gold jewellery is very much in demand in Asian countries such as China and India. Gold jewellery is not only a precious accessory in these Asian countries but they are also considered as a medium for trade. In the Western countries, gold jewellery is acquired for its value and beauty.
Gold is very strong, malleable and is an excellent conductor of electricity which is why it is used as an industrial metal. It is used in making electrical and computer parts. They are also used as lining for the cockpits of modern military aircrafts.
Understanding Gold Futures Market
The futures market is usually deemed a high risk investment but that is quite relative; others may view futures as a hedge against fluctuating and uncontrollable pricing.
Futures refer to the obligation of buying or selling a committed amount of commodity at a preset price on a particular day.
A gold futures contract is really a bet on gold price trends and has nothing to do with the physical metal, which does not concern the trader. Hence, futures trading is really a speculation rather than an investment.
Some traders view futures as a risk inhibitor. Gold mining firms that sell gold at some fixed price can hedge themselves from falling gold prices with futures trading. But many futures traders reap huge profits while being mindful of the risks attached. Those who wish to indulge in futures trading must be ready to take on those risks.
The saying is sure that a big gain opportunity is always balanced by a big loss possibility. However, futures trading is not really for the individual as the stakes are very high with unpredictable results. It is the leverage in futures contract that constitute the big gain opportunity and big loss possibility phenomenon (hedge funds realm).
Leveraging refers to the utilization of a small sum of money for a huge investment return. Hence, a gold contract of $35,000 would cost you $3,500 (minus fees and commissions) with a leverage of $31,500.
A small 10¢ gain of your contract, your investment value goes up by $10. For gold, it is possible for its price to swing $100 during the contract’s lifespan. Hence, for a price increase of $100, your investment value would increase to $10,000 to give you 300% gain.
But, the opposite can also happen; a price drop will incur a heavy loss in value which you would have to bear. Hence, leverage offers a seemingly easy and quick way to multiple your small investment, but it can also pull you deep down in serious financial losses quickly.
Futures contracts do offer an opportunity to traders to make a profit from the gold price increase and decrease. An investor expecting a price increase is said to be taking a “long” position while the one who expects gold price to drop will take on a “short” position.
There is “future” in the futures market. Futures contracts normally last only one year or less. Gold futures contract trading does not involve any physical gold delivery. Hence, it is normal for a trader to close out his position prior to the delivery date. Very few futures contracts last up to their whole lifespan. To close out, you will need to sell your contract.
The U.S. has eleven futures exchanges with two gold futures trading in New York and Chicago only. Overseas futures markets which trade in gold are also abundant.
Futures refer to the obligation of buying or selling a committed amount of commodity at a preset price on a particular day.
A gold futures contract is really a bet on gold price trends and has nothing to do with the physical metal, which does not concern the trader. Hence, futures trading is really a speculation rather than an investment.
Some traders view futures as a risk inhibitor. Gold mining firms that sell gold at some fixed price can hedge themselves from falling gold prices with futures trading. But many futures traders reap huge profits while being mindful of the risks attached. Those who wish to indulge in futures trading must be ready to take on those risks.
The saying is sure that a big gain opportunity is always balanced by a big loss possibility. However, futures trading is not really for the individual as the stakes are very high with unpredictable results. It is the leverage in futures contract that constitute the big gain opportunity and big loss possibility phenomenon (hedge funds realm).
Leveraging refers to the utilization of a small sum of money for a huge investment return. Hence, a gold contract of $35,000 would cost you $3,500 (minus fees and commissions) with a leverage of $31,500.
A small 10¢ gain of your contract, your investment value goes up by $10. For gold, it is possible for its price to swing $100 during the contract’s lifespan. Hence, for a price increase of $100, your investment value would increase to $10,000 to give you 300% gain.
But, the opposite can also happen; a price drop will incur a heavy loss in value which you would have to bear. Hence, leverage offers a seemingly easy and quick way to multiple your small investment, but it can also pull you deep down in serious financial losses quickly.
Futures contracts do offer an opportunity to traders to make a profit from the gold price increase and decrease. An investor expecting a price increase is said to be taking a “long” position while the one who expects gold price to drop will take on a “short” position.
There is “future” in the futures market. Futures contracts normally last only one year or less. Gold futures contract trading does not involve any physical gold delivery. Hence, it is normal for a trader to close out his position prior to the delivery date. Very few futures contracts last up to their whole lifespan. To close out, you will need to sell your contract.
The U.S. has eleven futures exchanges with two gold futures trading in New York and Chicago only. Overseas futures markets which trade in gold are also abundant.
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