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

These days, we rate everything from movies to Uber drivers. The key rating for the economy is credit rating, which is an assessment of the creditworthiness of a borrower. It shows how likely the borrower is to repay its debt obligations. Credit ratings reveal the level of risk associated with investing in the debt of a particular entity. They can be assigned to any type of borrower: an individual, corporation, city, state, or sovereign government.

A credit spread (also called a yield spread) is a spread between two securities that are almost identical, except for the quality rating. Because Treasuries are considered practically risk-free, they constitute a benchmark to which other bonds are compared. Thus, credit spread usually shows a spread between Treasury securities and identical (except rating) non-Treasuries. In other words, credit spread indicates the risk premium for investing in one (risky) security over another (considered to have almost no risk). For example, private companies can default, so they must offer a higher return on their bonds, because their credit rating is worse than that of the U.S. government, which, allegedly, cannot go bankrupt.

What connects Cthulhu, a Doge meme, and Putin? Well, there are cryptocurrencies which refer to all of them. And what is even funnier is that the market capitalization of Dogecoin, which was developed just for fun, is almost $300 million (as of April 30, 2019). Isn't it strange? We all know that a Great Cthulhu deserves much more so that people waste electricity in his name rather than in the name of that dog!

Currency exchange rate is the value of one currency in relation to another. Currency exchange rates can be fixed or flexible. If you’ve traveled to foreign country, you have a first-hand experience of what currency exchange is all about. You basically trade American dollars for its equivalent in British pounds, Japanese yen, Mexican peso, or any other currency. There are a variety of factors that will affect currency exchange rates. In this section, we’ll give you an overview on how currency exchange rates work:

It starts innocently. You just try to weaken the currency a little to make exports more competitive and to boost the economic growth. You intervene directly in the foreign exchange market, cut interest rates or engage in quantitative easing, just to improve a bit your economic position on the global stage. But before you know it, other countries do the same and you are in the middle of currency wars.

A cycle is a situation or process where something is regularly repeated with the passing of time. Seasons are the most straightforward examples of cycles: after spring is summer, then autumn, winter and once again spring, etc. Other cycles found in nature include days and nights.

A tendency is something likely to happen, although it is not certain that it will happen. Cyclical tendencies are phenomena that are likely to happen regularly, even though there is no guarantee.

Even dead cats bounce, the saying goes. But what does it have to do with financial markets? It turns out, quite a lot actually.

The death cross is a technical indicator which occurs when an asset’s (gold’s) short-term moving average (like the 60-day moving average) crosses below its long-term moving average (like the 200-day moving average). The death cross is the opposite of the golden cross. As the name implies, it is often associated with important downward price movement and it is considered a bearish signal. The crossover is considered more significant when accompanied by high trading volume. Once it occurs, the long-term moving average is considered a major resistance level.

Have you ever tried raising a ceiling? You can’t do that barring major home reconstruction. The debt ceiling is a different kind of animal, however. The idea is beautiful – to have a limit on how much debt the federal government can carry at any given time. If there is a debt ceiling, the government has to limit its spending.

When a household, corporation or government has an existing debt obligation, they’re expected to pay down the principal and accompanying interest. But far from every debt gets extinguished this way. Actually, most of them are paid off only thanks to taking on new debt. Call it robbing from tomorrow in order to pay for today, that’s what debt rollover is.

The debt trap is a situation in which a borrower rolls over the debt because he or she is unable to repay the principal. The cause – but also a consequence – of the debt trap are ultralow interest rates. Cheap credit makes debt financing more attractive, so everyone – households, corporations and governments – is encouraged to take on more debt. Indeed, the global debt as a percentage of the GDP has increased from around 100 percent in 1950 to almost 200 percent in 2007 and to 225 percent in 2017.