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

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.

In economics, an interest rate is the ratio in the mutual valuation of present goods against future goods. Since people prefer goods now to later, in a free market there will be a positive interest rate to reward deferring consumption. From the financial point of view, an interest rate is a rate at which interest is paid by borrowers (debtors) for the use of money that they borrow from lenders (creditors). To simplify, an interest rate is the cost of borrowing money, typically expressed as an annual percentage of principal.

Have you ever wondered why the Neanderthals went extinct, despite being individually stronger than us and having bigger brains? What gave homo sapiens a decisive competitive advantage over our distant cousins was international trade, back then called intertribal trade. It turns out that our species has conducted such trade for tens of thousands of years, in contrast to other species of hominids. This is what the archaeologists suggest: while they found that our ancestors imported both materials and finished products as ivory, stones, fossils, seashells and crafted tools were found dispersed through many Homo Sapiens sites. There is no evidence of such trade in case of Neanderthals. Instead, each group manufactured its own tools from local materials. They were self-sufficient. And they died.

The inverse head and shoulders formation (also known as reverse head and shoulders formation) is one of the most popular and reliable formations used in technical analysis. As the name suggests, it has a shape similar to the head and shoulder. This head and shoulders bottom pattern usually signals a change in price trend. When it occurs the security is likely to move against the previous downtrend. In other words, a completed inverse head and shoulders in gold means that gold is likely to rally.

Software programs designed to support decision process on multiple levels. Unlike analysts, investment tools are completely unemotional and objective, which allows for diversification between these two sources of signals. Such diversification can substantially lower the risk (variability) without compromising profitability. In fact, if tools are accurate, investor's and trader's profitability can increase.

A major regional power. The country with world's largest natural gas supply and the fourth largest proven oil reserves. A heir to the Persian Empire. A theocracy governed by an autocratic Supreme Leader. Iran. What are its links with the gold market?