Trading of Gold

Why gold prices will keep rising?

2010-06-20T06:52:00.000-07:00

There are lots of good reasons to take a stake in gold, and right now the price is one of them.
Because of Europian country Debt Concern the Gold is more safe place to invest so investers are making position in Gold rather than Equity. So this is the main reason of rising gold in last few weeks. Gold has recently touched a high of $1255.00 approx .

A weakened dollar is gold's best friend. Assuming the price doesn't fall significantly below $900, "then we will start heading up again, and if we can get firmly above $1,000, I think we could run anywhere between $1,200 and $1,500" an ounce, says Mark Arbeter, the chief technical strategist for Standard & Poor's.

INDIA'S LOVE FOR GOLD

2009-10-14T19:32:00.001-07:00

Over centuries and millennia, gold has become an inseparable part of the Indian society and fused into the psyche of the Indian. Having passed through fire in its process of evolution it is seen as a symbol of purity, the seed of Agni, the God of fire. Perhaps this is why it is a must at every religious function in India. Gold has acted as the common medium of exchange or the store of value across different dynasties in India spanning thousands of years and countless wars. Thus wealth could be preserved inspite of wars and political turbulence. For centuries, gold has been a prime means of saving in rural India.

In Western countries, gold jewellery is sold at fixed and high prices ranging from 100% to 300% and more above the value of it's fine gold content. In India, gold jewellery is sold at fluctuating and low prices related to the prevailing value of its fine gold content. The declared retail mark up ranges from 5-25%. It acts as a tradable investment and in that it is easy for consumers to sell or exchange their jewellery at a reasonable price. There are approximately 300,000 "traditional" gold jewellery outlets, more than 10,000 refiners, more than 1000 coin fabrication units and about 3 million active goldsmiths and ancillary workers throughout the country. The 181 million families in India hold an average of 64 grammes of fine gold of which atleast 90% is held as gold jewellery. (Source: World Gold Council). These statistics give a measure of the fanatical passion for gold in India.

India is the largest importer of gold with demand hovering around 25% of world gold demand. It imports about 663 tonnes of gold annually mainly in the form of small cast bars weighing 10 tolas (3.75oz), widely known as TT bars or biscuits. Eight major gold refiners in Australia, Switzerland, South Africa and United Kingdom produce most of the imported TT bars. The urs through two authorized Government schemes: Open General Licence (OGL) scheme since 1997 and the Non Resident Indian (NRI) scheme since 1992. The OGL scheme (several banks and public sector undertakings are authorized) accounts for 99% of official imports.

Price pressure on gold demand

2009-10-14T19:31:00.000-07:00

Soaring prices are likely to dent the demand for gold tomorrow, which is Dhanteras.

Merchants are expecting demand to fall by as much as 50 per cent, with buyers opting for smaller items.

The yellow metal rose to a record high of above $1,070 an ounce on Wednesday in London as the dollar slid to 14-month lows against the euro and oil prices inched towards $75 a barrel, boosting interest in commodities.

In India, where markets are influenced by global trends, prices are sizzling at record levels. In Calcutta, pure gold is at Rs 16,265 per 10 gm after scaling Rs 16,385 yesterday.

Dhanteras, when precious metals are bought in the belief it would lead to prosperity, generally accounts for sales of 15-20 tonnes of gold. But when consumers throng to jewellery shops and banks on Thursday, they are expected to look for smaller items.

“This year, our new initiative has been the 2 gram coin,” said an executive in a private bank in Mumbai. “Smaller coins are definitely going to sell more,” the executive added.

Traders and dealers said high prices, inflation and the economic slowdown are turning people into cautious buyers. “We see gold demand to drop by 50 per cent tomorrow because prices are ruling at an unaffordable level now,” Bombay Bullion Association president Suresh Hundia said.

Dhanteras is also expected to show Indians’ growing love for gold as an investment in the form of coins and bars rather than jewellery.

Jewellers and traders said the shift towards buying bullion over the past 4-5 years was here to stay as more consumers realise it is the more economical way to buy gold.

“Now even small investors have started buying gold coins. They collect it for their children,” said Harmesh Arora, director of NIBR Bullion Pvt Ltd, a Mumbai-based gold refinery that sells coins.

GOLD EXPLORATION PROCESS

2009-10-14T19:29:00.000-07:00

1) Literature survey:

India has a long history of mining for gold, dating back to 2000 years. References pertaining to old mine sites are available from the records and reports published by a number of British mining companies which were actively involved in exploration and mining of gold from the year 1880 onwards. After Independence, the Geological Survey of India (GSI) has carried out extensive regional exploration for gold in different parts of the country. Similarly, the Mineral Exploration Corporation of India (MECL) has conducted detailed surface and underground exploration for gold in deposits identified by GSI. In addition to these two Central Government agencies, the State Directorates of Geology & Mining located across the country have also contributed to gold exploration. The geological and exploration data generated by all these agencies are available in several publications of respective agencies. Collection of all this literature which facilitates picking up of targets for further probing, forms the first step in exploration process.

2) Geological mapping:

Preparation of a good geological map of the area of interest, initially on a regional scale (1:50,000) by taking up number of field geological traverses, and with the help of aerial photographs and landsat imageries is generally the next step.

3) Identification of gold bearing zones:

This is done by collecting rock chip samples from favourable locales for gold mineralization while preparing the geological map of the area. If the rocks are not exposed, geochemical methods like stream sediment sampling, soil sampling can be adopted to identify gold anomalous areas. Similarly geophysical methods can be deployed to locate any conductive or magnetic bodies below the soil cover. These targets will be explored by trenching and rock-chip sampling. Depending on the sampling results the target areas are demarcated for detailed sampling in three dimension.

4) Three dimension sampling:

Three dimension sampling of gold bearing zones is carried out by reverse circulation (RC) drilling and diamond core drilling. The RC drill is mounted on a truck and is easily mobile. The rock sample is obtained in the form of rock chips for every 1 m drilling. The RC drill can drill up to 100m a day and works on compressed air. The mobility of a diamond core drill is slow. In diamond core drilling, the rock sample is obtained in the form of solid core. Approximately 20 to 25 m can be drilled in a day depending on the hardness of the rock formation.

5) Estimation of global resource:

Based on the three dimension sampling of the gold-bearing zone (ore body), i.e. length, width, depth and grade, a global resource of the gold deposit is estimated.

6) Pre-feasibility exploration:

The global resource is further worked upon by close spaced diamond core drilling along length and dip of ore body and sampling to improve the reliability of the global resource estimate. It also helps in ascertaining whether the deposit is mineable or not.

7) Feasibility exploration:

Feasibility exploration involves additional extensive sampling on surface and underground. An open pittable resource of reasonable dimensions has to be further sampled on surface by very closed spaced drilling, bench cutting and bench sampling to delineate the mineable reserves and to demarcate ore from waste. A resource that could be exploited by only underground method of mining needs to be sampled by sinking shafts and developing ore body along its length. This sampling enables the delination of rich pockets of ore within the ore body and assessment of mineable reserves.

Exchange Rate

2008-07-11T22:59:00.001-07:00

In finance, the exchange rate (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies specifies how much one currency is worth in terms of the other. For example an exchange rate of 123 Japanese yen (JPY, ¥) to the United States dollar (USD, $) means that JPY 123 is worth the same as USD 1. The foreign exchange market is one of the largest markets in the world. By some estimates, about 2 trillion USD worth of currency changes hands every day.

The spot exchange rate refers to the current exchange rate. The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date

factors affecting currency trading

2008-07-11T22:56:00.000-07:00

Although exchange rates are affected by many factors, in the end, currency prices are a result of supply and demand forces. The world's currency markets can be viewed as a huge melting pot: in a large and ever-changing mix of current events, supply and demand factors are constantly shifting, and the price of one currency in relation to another shifts accordingly. No other market encompasses (and distills) as much of what is going on in the world at any given time as foreign exchange.

Supply and demand for any given currency, and thus its value, are not influenced by any single element, but rather by several. These elements generally fall into three categories: economic factors, political conditions and market psychology

History of Forex

2008-07-11T22:48:00.000-07:00

Until the mid-seventies, major industrial economies were governed by the Bretton Woods agreement of 1944. The Bretton Woods agreement—which was named after the location of the international conference establishing this new monetary order—obliged participating international economies to peg their currencies to the dollar, which itself remained within a 1% standard deviation from the prevailing gold rate.
The architects of the Bretton Woods agreement hoped to prevent countries from artificially devaluating currencies, in order to make goods more attractive in the international marketplace, which led, in part, to a disastrous shrinking of the world economy in the 30s.
The system they established lasted for the next three decades. Shrinking confidence in the dollar, however, lead to a new international monetary system of floating rates, meaning that regular market forces, rather than governmental intervention, would determine the value of currencies. It was from this new system that the modern Forex market arose.
In a floating exchange rate system, market demand determines the relative value of currencies. Such a system is thought of as self-correcting, as any inefficiency is hammered out in the market. If, for instance, global demand for a particular currency falls, goods will become cheaper, and thus the value will begin to rise with the newly created demand.
In a floating exchange system, traders can exploit inefficiencies before the market corrects itself. These traders are called arbitrageurs, and they are able to utilize online brokers to execute their trades. If you are interested in beginning to trade in the Foreign Exchange, please visit our broker’s page to find a broker suitable for you

Why should I learn Forex currency trading?

2008-06-09T23:30:00.000-07:00

By reaching to our website, I think you are already aware that Forex trading is a good way to make money at home. More over, I bet you knew someone, or would have heard of someone, who's already making tons of good money in FX trading.

But what you wouldn't know is that 7 out of 10 traders keep losing money in Forex market! That's right, 70% of individual FX traders keep losing their hard-earned money in the market; while the rest of the 30% work freely at home and earn millions annually)

Wonder what differs between the losing 70% and the winning 30%? Forex trading skills and the trading system! If you want to work less than 20 hours a day at home, if you want to make millions by trading freely at home, if you want to have financial freedom by trading Forex; you better LEARN Forex trading before you start trading Forex. Forex market is definitely not a game for newbie and you need to brush up your skills before getting your hands wet.

FOREX

2008-06-09T23:28:00.000-07:00

FOREX is the world’s largest and most liquid trading market. Many consider FOREX as the best home business you can ever venture in. Even though regular people have had

the opportunity to take part in trading foreign currencies for profit (in the same way banks and large corporations do) since 1998, it is just now becoming the cool, hip, new "thing" to talk about at parties, business events, and other social gatherings.

Best Forex Trading Books

Even though it has been somewhat of a loosely guarded secret, every day more and more investors are turning to the all-electronic world of FOREX trading for income and profit because of its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities.

But, still, whenever something seems new or is just becoming a part of social conversation, news articles, and water cooler gossip, misconceptions have to be overcome, the mind has to be open and the slate has to be clear for starting out fresh with the CORRECT information.

So, in this article, it is my attempt to give you some solid, but not over-detailed, information on just what the heck "FX" (FOREX) means, what it is, and why it exists.

As a successful trader said, Trading FOREX is like picking money up off the floorNot trading FOREX is like leaving it there for someone else to pick up." Others in the industry have also said, Trading FOREX is like having an ATM machine on your own computer.

Here's an explanation (one I feel you'll appreciate) of what FOREX is and how a bunch of traders, profit from it:

The Foreign Exchange Market, also referred to the "FOREX" or "FX" market, is the spot (cash) market for currency.

But, don't mistake FX as trading the futures market, where you buy a contract to purchase a particular currency at a future price in time.

What FX traders do is much less risky than trading currencies on the futures market, much more profitable, and a lot easier, than trading stocks.

So, you're probably wondering where it's at ... or ... how to access the FX market?

The answer is: FX Trading is not bound to any one trading floor and is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.

Yes, if that's the first time you've heard about an all-electronic market, I know this may sound somewhat intriguing to you.

Here's what you are actually trading when you participate in the Foreign Exchange (FOREX) market:

Essentially, like the large banks who use the FX market to protect themselves from the fluctuating exchange rate of different currencies, as an investor, what a FX trader is doing is simultaneously exchanging one countries currency for another. So, in actuality, they're electronically trading a currency-pair and the price that is quoted to us is the exchange rate between the two currencies.

In other words, simply the quoted price is how many of the one currency is worth 1 of the other currency.

What is a pip?

2008-06-09T23:27:00.000-07:00

Pip stands for "percentage in point" and is the smallest increment of trade in FX. In the FX market, prices are quoted to the fourth decimal point. For example, if a bar of soap in the drugstore was priced at $1.20, in the FX market the same bar of soap would be quoted at 1.2000. The change in that fourth decimal point is called 1 pip and is typically equal to 1/100^th of 1%. Among the major currencies, the only exception to that rule is the Japanese yen. Because the Japanese yen has never been revalued since the Second World War, 1 yen is now worth approximately US$0.08; so, in the USD/JPY pair, the quotation is only taken out to two decimal points (i.e. to 1/100^th of yen, as opposed to 1/1000^th with other major currencies).

Where is the commission in FX?

2008-06-09T23:26:00.000-07:00

Investors who trade stocks, futures or options typically use a broker, who acts as an agent in the transaction. The broker takes the order to an exchange and attempts to execute it as per the customer's instructions. For providing this service, the broker is paid a commission when the customer buys and sells the tradable instrument.

How does this market differ from other markets?

2008-06-09T23:25:00.000-07:00

Unlike the trading of stocks, futures or options, currency trading does not take place on a regulated exchange. It is not controlled by any central governing body, there are no clearing houses to guarantee the trades and there is no arbitration panel to adjudicate disputes. All members trade with each other based upon credit agreements. Essentially, business in the largest, most liquid market in the world depends on nothing more than a metaphorical handshake.

At first glance, this ad-hoc arrangement must seem bewildering to investors who are used to structured exchanges such as the NYSE or CME. (To learn more, see Getting To Know Stock Exchanges.) However, this arrangement works exceedingly well in practice: because participants in FX must both compete and cooperate with each other, self regulation provides very effective control over the market. Furthermore, reputable retail FX dealers in the United States become members of the National Futures Association (NFA), and by doing so they agree to binding arbitration in the event of any dispute. Therefore, it is critical that any retail customer who contemplates trading currencies do so only through an NFA member firm.

Forex trading

2008-06-09T23:23:00.000-07:00

The investor's goal in Forex trading is to profit from foreign currency movements. Forex trading or currency trading is always done in currency pairs. For example, the exchange rate of EUR/USD on Aug 26th, 2003 was 1.0857. This number is also referred to as a "Forex rate" or just "rate" for short. If the investor had bought 1000 euros on that date, he would have paid 1085.70 U.S. dollars. One year later, the Forex rate was 1.2083, which means that the value of the euro (the numerator of the EUR/USD ratio) increased in relation to the U.S. dollar. The investor could now sell the 1000 euros in order to receive 1208.30 dollars. Therefore, the investor would have USD 122.60 more than what he had started one year earlier. However, to know if the investor made a good investment, one needs to compare this investment option to alternative investments. At the very minimum, the return on investment (ROI) should be compared to the return on a "risk-free" investment. One example of a risk-free investment is long-term U.S. government bonds since there is practically no chance for a default, i.e. the U.S. government going bankrupt or being unable or unwilling to pay its debt obligation.

When trading currencies, trade only when you expect the currency you are buying to increase in value relative to the currency you are selling. If the currency you are buying does increase in value, you must sell back the other currency in order to lock in a profit. An open trade (also called an open position) is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position.

However, it is estimated that anywhere from 70%-90% of the FX market is speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency.

An overview of the Forex Market

2008-06-09T23:22:00.000-07:00

The Forex market is a non-stop cash market where currencies of nations are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets and traders' investments increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events.

The main enticements of currency dealing to private investors and attractions for short-term Forex trading are:

24-hour trading, 5 days a week with non-stop access to global Forex dealers.
An enormous liquid market making it easy to trade most currencies.
Volatile markets offering profit opportunities.
Standard instruments for controlling risk exposure.
The ability to profit in rising or falling markets.
Leveraged trading with low margin requirements.
Many options for zero commission trading.