The Best Gold Trading Strategies
Deciding upon the best Gold trading strategy or strategies to use requires you to consider the cases for trading Gold using fundamental or technical analysis, or a combination of both. Let’s consider the basis of such strategies and how they have performed over recent decades to help you make that decision.
Fundamental Analysis
Unlike stocks and shares, or a valuable commodity such as crude oil, Gold has very little intrinsic value as it has few practical uses. However, it is rare, and humans are attracted to it and have attributed value to it by consensus. It is impossible to measure minor fluctuations in that human perception from day to day, so in this sense, fundamental analysis is of limited value.
Another aspect of Gold which differentiates it from fiat currencies such as the U.S. Dollar is that its supply is limited. This should mean that a limited supply of Gold can be taken for granted. A problem with this analysis is that almost all the world’s known Gold is held by banks and governments, but nobody knows for sure exactly how much there is. It seems that the large banks, who have colluded for years to fix the price of Gold by means of a twice daily “Gold fix”, are able to manipulate perceptions of supply and demand.
Fortunately, a fundamental analysis of Gold can be applied through a macroeconomic analysis. For example, analysts traditionally see the value of Gold rising under the following circumstances:
Deciding upon the best Gold trading strategy or strategies to use requires you to consider the cases for trading Gold using fundamental or technical analysis, or a combination of both. Let’s consider the basis of such strategies and how they have performed over recent decades to help you make that decision.
Fundamental Analysis
Unlike stocks and shares, or a valuable commodity such as crude oil, Gold has very little intrinsic value as it has few practical uses. However, it is rare, and humans are attracted to it and have attributed value to it by consensus. It is impossible to measure minor fluctuations in that human perception from day to day, so in this sense, fundamental analysis is of limited value.
Another aspect of Gold which differentiates it from fiat currencies such as the U.S. Dollar is that its supply is limited. This should mean that a limited supply of Gold can be taken for granted. A problem with this analysis is that almost all the world’s known Gold is held by banks and governments, but nobody knows for sure exactly how much there is. It seems that the large banks, who have colluded for years to fix the price of Gold by means of a twice daily “Gold fix”, are able to manipulate perceptions of supply and demand.
Fortunately, a fundamental analysis of Gold can be applied through a macroeconomic analysis. For example, analysts traditionally see the value of Gold rising under the following circumstances: