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

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.

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.