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

High-frequency trading (HFT) is a type of algorithmic trading strategies characterized by a large number of orders at very fast speed (they operate in milli- or microseconds). It is used by large investment banks, hedge funds and institutional investors and utilizes powerful computers, sophisticated technological tools and computer algorithms to rapidly trade securities (move in and out of positions in seconds or fractions of a second).

Have you known that in German word for “debt” – Schuld – is the same as the German word for “guilt”? If Germans got it right, then Americans are very guilty. Guilty of indebtedness. Let’s take a look at the chart below. It shows the U.S. household debt – i.e., the combined debt of all people in a household – over time.

You should buy a house. After all, the real estate cannot lose value. This was the common belief that led to the Great Recession. It all began in the aftermath of the dot-com bubble. When the Nasdaq, Dow Jones and S&P 500 Index plunged, people got discouraged to the stock market and they fled to real estate. Even Mark Twain once said: “Buy land, they aren't making anymore of it.” Real estate was considered to be safe. But it was an illusion. A bubble.

Home, sweet home! Doesn’t everyone want to own one? For many, the homeownership is an important goal, or even the cornerstone of middle class life, the epitome of American Dream. Although the Great Recession and the burst of the housing bubble diminished the allure of homeownership, still many people dream about their own place. Indeed, each year millions of new houses change hands – and millions of new construction projects start.

The Amex Gold BUGS (Basket of Unhedged Gold Stocks) Index, also known as the HUI Index, is an index of gold mining companies that do not hedge their production beyond 18 months. Contrary to the XAU Index, it includes only gold stocks.

Hyperinflation is very high inflation. Although the threshold is arbitrary, many economists define hyperinflationary episodes as periods when the monthly rate of inflation is greater than 50 percent. As the rise in prices gets out of control, there is a loss in confidence in the currency, which further fuels inflation.

The International Monetary Fund, based in Washington, D.C., is an international, intergovernmental organization overseeing the global financial system.

A new global power. The world’s most populous democracy. One of the youngest and fastest-growing countries in the world, with the third largest GDP measured by purchasing power parity. The world’s largest producers of movies and the major exporter of IT services. India. What are its links with the gold market?

Imagine such a situation: if you could determine when you buy or sell your assets by watching just two lines, when one line crosses the other line, you buy. When the same line crosses the other line in a different, way you sell.

Can you imagine a world without a GDP? It’s not easy, is it? That’s because GDP is the key widely used indicator. But it’s a recent invention. Prior the WWII and the Great Depression, there was no national statistics. Economist relied on freight hauling data, stock market (with Dow Jones as key index) and mainly industrial production to get the picture of the overall economy.

The increase in the prices of goods caused by the increases in the money supply. In connection with this underlying cause, you can also hear terms such as wage inflation and cost inflation. The former looks at the wage component as an inflationary driver, while the latter posits that inflation relates to the increased cost side.

An inflation hedge is an investment that maintains or increases its value over time. Hence, an inflation hedge should provide protection against the depreciation of the currency. For example, fixed rate bonds are a poor hedge against inflation. If one invest in a bond that gives a 3 percent return, but inflation rate is 5 percent, they are actually losing their purchasing power. On the other hand, most ‘hard assets’ are believed to be excellent inflation hedges. These hard assets are oil, farmland or gold.