Explanations of "Gold" investment-related terms A to Z

Imagine there’s no government. It’s easy if you try. You may say, I am a dreamer, as John Lennon would say. However, you do not have to imagine this, as American history records several government shutdowns. Surely, it’s not a full-blown anarchy, but there’s still something to it. What’s that? In the context of the United States, the government shutdown occurs when nonessential government offices are closed due to lack of funding.

Grade in commodity market refers to the purity or quality of the deliverable into the futures contract. Grade definition varies from contract to contract and also from exchange to exchange. Each exchange offer a range of products and according to the quality, the prices may vary.

The Great Depression was the longest and most severe economic depression ever experienced by the global economy. It took place during the 1930s, began with the U.S. stock market crash of 1929 and ended after World War II.

We’re in unchartered waters as it has never before happened that the economy would be voluntarily closed down. Yet, here we are – economic activity was forced to ground to a standstill by governmental decisions across many countries in the world. Faced with the grim coronavirus death projections, leaders just reached for the presumably lesser-evil solution.

But where is the balance between public health protection (and using what means should we go about that exactly?) and the cure being worse than the actual disease? Lockdowns have their costs too, and the longer they take, the harder it is to turn the economy back on and see it perform at the pre-lockdown level.

By now, it should be apparent that a lockdown brings about a recession, and that how long the stop to economic activity lasts, answer the question of how steep the recession is going to be. Instead of recessions, you can hear the d-word (depression) thrown around as well.

Let’s examine the economic impact and projections first, followed by a detailed look at gold fundamentals. Quite a few reasons for the gold bulls to cheer.

The Great Recession was a recession that in the U.S. lasted officially from December 2007 to June 2009.

The most common usage of the term Greenback in the modern economy is as another term to refer to the United States Dollar.

The term Group of Eight (G8) refers to an association of governments from several developed countries which assemble to discuss world socio-economic matters of global impact.

The term Hard Money is used to describe certain financial instruments or transactions which are backed by some sort of added certainty or security.

A short, hooked bill, curved and sharp talons, and keen eyesight. Hawks. Magnificent animals.

You are probably wondering why we write about birds on a website devoted to precious metals and other investments. The reason is that “hawk” is a term used not only in ornithology, but also in monetary policy. It means a policymaker who is predominantly concerned about inflation. Hence, hawks generally favor higher interest rates and tight monetary policy to deter inflationary pressures. They constantly fight with the doves who are rather concerned about unemployment and prefer lower interest rates and easy monetary policy to support economic growth.

In this tug-of-war, the Fed sometimes adopts a more hawkish or a more dovish tone. The former signals a more aggressive stance towards monetary tightening, while the latter indicates a preference towards easy monetary conditions.

The head and shoulders top formation (H&S top) is one of the most popular and reliable chart formations used in technical analysis. As the name indicates, its shape is similar to a head with shoulders on both sides. A head and shoulders pattern usually signals changes in the price trend. When it occurs, the analyzed security is more likely to move against the previous uptrend. For instance, a head and shoulders in gold, would mean that the top in gold is likely in.

Hedging means cancelling something by doing something else. When investments are concerned, hedging means taking the opposite position to the one that an investor currently holds. The final outcome is similar to closing the original position.

Helicopter money, also called monetary finance or money-financed fiscal programs, has two meanings. Interpreting Milton Friedman’s metaphor of helicopter drops (from whence comes the name) literally, helicopter money is a money transfer from the central bank directly to the citizens, bypassing the financial sector or government (for example, imagine that the Fed transfers each month, let’s say, $500 to each American). The second definition, most common among economists, is an increase in public spending or a tax cut financed by a permanent increase in the money supply (for example, imagine that the Fed directly credits the government’s current account). In other words, it would be financing a budget deficit by the increase in the monetary base. This is why helicopter money may be regarded as a quasi-fiscal policy or even a monetization of public debt.