Gold Market Investing : The Shine on the Gold Markets

In futures options trading in general and metals market in particular

, Gold market will always keep a high position in the concerning list. Traders and investors usually keep busy in Gold market since it is changeable and contains lots of risks. For it sounds interesting, today we will have a talk about gold market investing: The Shine on the Gold Markets.

First of all, we will have an overlook about this very popular preicous metal: Gold. As you usually see advertisements or people talking about the precious metal. All of us may know that they have commercials on TV called "cash for gold" that are replayed 12 times on CNBC. They even made fun of these advertisements with a super bowl commercial. Wherever you are, you will usually hear someone talking about the precious metal. This is no surprise that investors are flocking to this as a potential safety net in the distressed economic times we are facing.

On September 11th, 2001, it all started back when the bull market for gold started to take shape. After the terrorist attacks of that day gold has never looked back. The prices started shooting from $250 to $350 an ounce after the fear factor set in. Investors also started to move with interest to the metal after President Bush declared war against Iraq.

Another factor that also created the rise in gold was the weak USD. The USD started losing a lot of ground against major foreign currencies, especially the Euro. From 1999, the Euro has become the major currency of trade. The USD started to fall harder and harder from 2004-2008. In the mean time, Gold prices rose at a quicker pace from 2005-2007 increasing some 75% from $450 to $750 an ounce. At its weakest point the EURO/USD ratio was 1.60. In March 2008, this is when gold reached its peak of $1,030. This is where the talk really started to take place.

At the beginning of 2008, there was something wrong in the US economy. The US entered into deep recession, and growth had come to a standstill. Major world exchanges have lost more than 40% of their value as the credit crisis and mortgage lending business came down upon us. Traders then saw a downward move in Gold to$700 an ounce as the USD staged a trong rally trading all the way down to $1.25 against the EURO. However, it wasn't for long, traders quickly rushed back in to propel prices back to over $900, but the recession still loomed worldwide.

How about the Gold market nowadays? It is now back above $950 an ounce, and looking more like it may be headed to $1,000 than back to $800. The US can't seem to get things straightened out with the bailout and stimulus plans and the Dow Jones Industrial Average is setting lower lows almost at a daily pace. In the near future, $1,000 an ounce seems like a short pit stop for higher prices. Just keep up with the daily gold and futures prices to see how it changes.

You have just had a short view of The Shine on the Gold Markets to see how it has changed thanks to time and the fundamentals. We know them and will care about them. But, fundamentals affectings on Gold prices will be many more. We week to learn and observe. To end up, I would like to again remind you that trading in futures and options involves a substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. Wherever you trade, Gold or Metals or Futures, knowledge is always king.

Gold Market Investing : The Shine on the Gold Markets

By: Tony Lee

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