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What Else Still Buys a Suit after 2,000 Years

Jul 19, 2008
What has not changed much in terms of purchasing power since the times of the Roman Empire - Why gold of course. Not many people realise that a Roman Legionnaire getting all togged up at his local bazaar would have had to part with about the same weight of gold as you would in today's high-tech society clothes store.

So, having stood the test of time down through the millennia for value, gold has another important function to play today. With all the woes that mankind has brought about due a mixture of fear and greed, when all else fails, everyone turns back to gold for security.

Since all of the major currencies in the world are now off the gold standard, what value is a stack of dollars, dinars, Euros or pound sterling going to keep, as inflation continually erodes their real value?

Is it any wonder that the price of an ounce of gold (in most people's memories once worth $35 an ounce), since events like 9-11, and now the ever-soaring price of crude oil, multiple conflicts around the Globe, not to mention the threats of terrorist attacks, has soared, even this year to over $900 an ounce, peaking at the amazing height of $1,002 on the 3rd March this year.

What is more frightening, or perhaps very opportunistically, is that the price of gold this year alone has soared from $840.14 at the beginning of January, and by the middle of the year it is still trading at around $883 an ounce.

But look - in those months, in line with bad news, oil price hikes, falling dollar values, and such like, has seen this price see-sawed in value from the dizzy heights of $1004,62 down to $862.45

What an opportunity for speculators... Massive swings in the value of gold from a peak of $1006 one day, down to $847.84 a few days later; back up to $935 a few days later.

OK, so somebody may have made $165.86 if they bought an ounce of gold as a New Years Day gift, and sold it on the 3rd March (assuming that their Government let them buy gold bullion!)

But now let's look at the power of leverage in trading in gold...

Unlike currency trading, gold seem to be far more volatile, but losses can be as spectacularly large as the massive gains to be had, so make sure you know what you are doing before you venture into this exciting activity!

As gold is usually quoted in terms of US dollars, it has a price like $876.38 per ounce. Each point movement up or down of the two decimal places is known as a point or PIP. As most traders have a standard trading amount of $100,000 each PIP has a value of $10 (0.01% * 100000).

So if you put on a trade to buy gold at say $849.01 and when you actually execute the trade, the value is now $851.28 that will represent an increase of 227 points or Pips.

If you invested $100,000 on that trade, then you would have made around $2,270 profit or 2.7% (less any commissionsor spreads).

Now, let's say the trading platform you are using, allow you to use a margin of 100:1 on your investment. That means that to place a trade of $100,000, you only have to put at risk $100 of your own money. So now, your profit is still $2,270 on that previous trade, but at a massive profit of 227%

Just to be really reckless then, you place a trade of $1,000,000 at 100:1 on gold at $836.92, and execute that trade when gold reaches a level of $987.88. That's 15,096 Pips at $100 per Pip!

Or $150,960 profit from a risk capital of just $1,000.

Now these sorts of swings do not occur every day, but quite hefty swings do take place with quite regular and pleasing regularity. Especially when oil shoots up to over $150 a barrel!

Another thing! It is also just as easy to make a great deal of cash when the price of gold falls as when it rises in price. How? Simple. You buy on the way up, and sell on the way down.

But - before you go out and risk the shirt off your back, please make sure you take care to understand what you are doing - and seek help and advice from the various FOREX trading clubs either on-line, or better still, go visit a real live association.

You'll never look back!
About the Author
Geoff Morris, already an expert internet marketer, has
now opened a private Forex Trading Group
in London
. For a fre.e report on an
introduction to Forex Trading
, including details of his
Forex training in London please click
here. http://forexmastergroup.com
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