Gold is still one of the best stores of value against potentially volatile global markets and fiat currencies. One only needs to look at the escalating gold trade at the UAE’s public marketplace of the Dubai Gold Souk where gold sales continue to flourish.
There are a number of advantages in buying and trading gold in the markets.
In this article, we’ll look at where and how gold markets operate, and how gold can be traded on Olymp Trade.
Buying and Trading Gold – Advantages
There are many reasons why gold has been used as a form of currency by humanity for centuries. More importantly, it is still seen as a safe store of value, irrespective of the fact that fiat currencies dominate our modern society.
What does this mean?
A safe store of value essentially means that if the world has serious economic shocks, or a paper currency starts losing value, gold will still hold its value as a tradeable asset. This results in people owning gold still maintaining their wealth, even if local currencies lose value.
If a country experiences a serious economic downturn, individuals that own gold will still be able to buy goods at a reasonable price, regardless of local scenarios such as hyper-inflation.
A prime example of this is currently seen with the dollar increasing its strength against foreign currencies. The local currencies of Syria and Turkey have lost significant value and this makes it very difficult for these countries to import products at rational prices. People holding gold are however able to buy essential goods in spite of their country’s current financial climate.
With the Saudi Aramco IPO and the price of oil still struggling to maintain reasonable levels, gold is now a popular asset in Saudi Arabia to hedge against any adverse economic ramifications.
Even when there is no financial crises and economies generally do well, financial institutions and wealthy investors often keep some gold as a fund for rainy days, as they know that all economic cycles will eventually slow and then reverse. When this happens, they will still hold a valuable commodity that typically rises in value significantly.
A good example of gold’s value increasing happened in 2019, when gold prices increased by 20% despite the strong American economy. Gold trading also continues increasing in volume.
Where and How Can Gold Be Traded?
The majority of gold trading transactions are handled by two major exchanges: the London Mercantile Exchange and the Chicago Mercantile Exchange, which operates in New York City and Chicago. Gold’s current price is mostly determined by price action in those two markets.
Both of these exchanges verify and regulate actual gold stores and keep big inventories of gold for buyers. They also arrange for gold to be physically exchanged when that happens.
Many brokers and trading platforms give traders access to these markets, both in person and online.
Trading Gold on Olymp Trade
Gold trading can be done on both the MT4 platform and the Olymp Trade platform. The Olymp Trade platform’s Fixed Time and Forex trading sides also facilitates gold trading, thus providing Olymp Trade clients with increased flexibility.
When the Fixed Time Trading side of the platform is used to trade gold, returns vary from 10% up to 92%, depending on current market conditions and based on the trader’s level on Olymp Trade. Using the Fixed Time Trading side to trade gold can be very profitable for short term investors, including day traders, as gold experiences a good deal of price movements throughout a typical trading day.
Gold traders can benefit from the x50 multiplier on the Forex side of Olymp Trade’s platform, as it helps in securing increased profits from clients’ open positions.
The Forex side also allows open positions (overnight swaps) in gold to be carried over, enabling investors to take Sell or Buy positions for longer-term trading plays. Combined with the Stop Loss and Take Profit tools available on Olymp Trade, this could add up to gold positions that are extremely profitable, as it is able to hold trends for extended periods.
For traders not able to utilize the swap features or the multipliers due to religious restrictions, trades can be closed out on a daily basis and can be done without using the multiplier in order to stay halal.
Conclusion
Many serious investors have some gold or other stored value assets in their portfolio. There are good reasons why governments, trading houses, and wealthy individuals buy and keep the precious metal. It has been proven that gold is a safe and reliable method to hedge against financial disasters and to protect savings.
It can however be extremely profitable to trade gold in both the long and short term, due to its consistent performance allowing good trading strategies to be applied and great profits to be made, even if you’ve decided not to use it to build a nest egg.