Twenty Year Gold Price Chart

Twenty Year Gold Price Chart

We all know there is money to be made, and lost, in Gold.  The problem is for most people starting out is, whether looking to buy or sell gold, when to pick the right times to make ant sort of trade.  Let’s face it, it is difficult to decide with gold prices going up and down every day, seemingly following no discernible trend, and all the so-called “experts” out there giving contrasting advice.

Regardless of the way you want to trade, buy or sell physical gold, futures, jewelry or IRA’s, you need need to be able to look at the fundamentals of the factors effecting gold markets.  And, the good news, regardless of all the masses of complex and convoluted information out there, is that it really is not rocket science.  Gold prices and the things that effect them can be understood by everyone.

Typically, when the investors see that traditional stocks will make them gains (profits) they will move money into stocks at the expense of investing in Gold.  This will tend to slow, stop or retard the prices of gold.  Conversely, when investors see that traditional stocks are moving down, they will move money into gold (and other precious metals) as these are seen as long term assets with stability.  More money moving into gold typically means higher demand, which means less supply and therefore higher gold prices.

Of course, everything is not black and white.  There are many other factors that effect the direction of gold prices.  For example, one must look at consumption and what the major consumers such as China, India and the USA are doing.  If, for instance, India has a large rise in gold usage (for jewelry) then there will be less gold to use and, again, the laws of supply and demand will kick in making gold prices move up.

The other factors to look at are inflation in the major economies, especially the USA., and how much gold the central banks are moving around.   Many think that the central banks are conspiring to artificially keep gold at lower levels – which would explain why there have been massive transfers of bullion into Switzerland recently – but some see this practice as having no real effect.

At the end of the day, whichever way you want to trade, carefully watch what the big investors are doing and where they are moving their money – that should give you a good “heads-up”.