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

There are many ways to gain exposure to movements in the commodities, including precious metals. One of them is mining stocks, i.e. shares in mining companies.Mining stocks can be divided into two broad categories: seniors and juniors. The former are stocks of a considerably large commodity producing mining companies with an established position and relatively large market capitalization, while the latter are stocks of smaller mining companies with little capital and short history. For these reasons, juniors are more risky than seniors.

The Great Recession has shaken the world. It not only sent the global economy to the verge of collapse, but also sank the whole science of economics into disarray. The orthodox approach was questioned and alternative theories emerged. One of them is the Modern Monetary Theory (MMT) which is gaining traction with some economists and politicians, especially within the left wing of the Democratic Party. What is it and what would it bring for the economy and the gold market, if implemented?

Monetary policy is an economic policy which aims to achieve macroeconomic goals such as low inflation, low unemployment, high economic growth and financial stability. The second major macroeconomic policy is fiscal policy conducted by governments. Monetary policy is usually conducted by independent central banks.

Money, it’s gas, as Pink Floyd sang and as we all know. But it’s also a medium of exchange which enables economic calculation and our sophisticated civilization. Over history, a lot of things were used as money, including cattle or salt, but precious metals dominated as a medium of exchange.

The money supply is the total amount of money available in an economy at a particular point in time. The quantity of money is probably the most important concept in economic theory, since it affects the price level. The increase in money supply causes price inflation, while the decrease in money supply leads to price deflation.

A type of a loan secured by real estate. A mortgage deal involves at least two sides: the borrower (typically a home buyer) and the lender (usually a financial institution). The lender provides the borrower with financial means necessary to buy a specific property. The borrower agrees to pay interest on the loan and uses the property as collateral. The deal might encompass various intermediaries between the lender and the borrower.

A moving average (rolling average, rolling mean, running average, MA) is the average of the closing price of a security over a specified period of time. It smoothes short-term price fluctuations, thus giving a clearer picture of the trend. The 50-day and 200-day moving averages are quite often used as support and resistance levels for gold, silver and mining stocks.

Did you know that states, counties, or municipalities also can issue bonds? These bonds are called “municipal bonds”. As they are issued by local governments, they are mainly used to finance infrastructure projects such as the construction of highways, bridges or schools.

Natural interest rates often equal to the neutral interest rate in many investors' minds, but this is a mistake as they are important differences between the two. The latter is treated as the real interest rates that is consistent with output reaching its potential and stable inflation, while the former is an interest rate that reflects the time preference of market participants and allocates resources among the temporally defined stages of production. In other words, it is an equilibrating interest rate consistent with intertemporal consumption preferences and production plans.

Net Asset Value (NAV) is the value of an entity's assets minus the value of its liabilities. It is most commonly used in reference to mutual funds or exchange traded funds (ETFs) and calculated on a per-share basis. ETFs calculate the NAV at 4 p.m. EST, after the markets have closed.

Many years ago, Walter Bagehot noted that “John Bull can stand many things, but he cannot stand two per cent.” Well, since the Great Recession, he has had to stand yields well below that. Actually, in many countries, investors have to stand interest rates below zero. How logical is that?

The key concept in modern central banking. And its fatal flaw. The neutral rate of interest, often depicted as r-star (r*). In  the mainstream macroeconomic modeling, the neutral interest rate is treated as the real interest rates that is consistent with output equaling potential and stable inflation.