Trade is the
exchange of goods and/or services. International trade is simply the exchange
of goods or services across national borders (e.g. American car sold to a
Canadian dealership). Foreign exchange trading, aka forex trading, is the
trading of currencies. This is called foreign exchange because it is an
exchange of foreign currencies. Gold trading is the purchase of gold by someone
for the main purpose of investing.
Foreign Exchange, aka Forex Trading
- Foreign exchange trading happens daily.
- It is estimated by multiple major banks that
the amount of money that exchanges hands daily due to foreign exchange trading
is far over $5 trillion US Dollars.
- The amount
forex deals with daily ($5 trillion USD) is about 5 times the amount the New
York Stock Exchange deals daily.
- Historically, foreign exchange has not been
very common; most money in history has been of precious metals such as gold and
silver.
- Despite
the previous point, certain people in Biblical times sometimes exchanged currencies
that were used then, and took a tiny commission for themselves.
- The exchange rates for Foreign exchange has
been quite lenient since 1971, when the US government decided that the US
Dollar should not be fixed to the $35 per ounce that was decided in the Bretton
Woods agreement in 1944.
- Forex trading is everywhere. The currency exchange centers at airports are excellent
examples
- In the US,
Alexander Brown & Sons, a leading banking firm, traded foreign currencies
around the era of 1850, and was possibly one of the largest in the world at the
time.
- In 1880,
Forex is considered to have begun, due to the fact that the gold standard was
just introduced.
- Deutsch
Bank is the largest foreign exchange trader (forex trader), in terms of market
share.
What is Currency Manipulation?
If you read
stereotypical political talking points, you will know many people (like Mitt
Romney), have called China out for currency manipulation. What currency
manipulation is very similar to the Foreign Exchange Market. Basically, it is
setting your exchange rates really high (6.2 yuan is 1 dollar, but the Chinese
may want to sell 5 yuan for 1 dollar). This is the root cause for their
currency going to extremely high values in the past 5 years.
Gold Trading Facts
- Gold
trading is effective because gold doesn't change value, while paper money in
relation to goods does. When there is inflation, an ounce of gold will still be
the same, while it'll equal more dollars when sold.
- Gold
bullion is cheaper than coin
- Most gold
bullion is not pure gold, which is 24 karats. Most bullion are 22 karat gold.
Gold Trading Companies
Most Major
Banks sell gold as well as help you store them.
Gold Trading Advice
You should
buy at a time of deflation, when paper money in relation to the goods and
services provided by the market is more valuable. Then, the amount of gold you
get per dollar is more. Then, when there is high inflation, sell the gold,
because you will get a lot more cash in return. If you do this in a loop, you
surely will be making money, although it certainly takes time.
Stocks Trading
This is the
form of trade/investment that people love to try, although few succeed, since
stocks are extremely unstable, and can skyrocket or drop like a rock at any time.
This doesn't require large amounts of money to get in, unlike gold trading.
However, most people invest large sums in stocks, hoping to get rich.
The general
consensus relating to stock trading is that to buy during times of recession,
when all the companies are worth less, and so are their shares. Sell when the
economy is in a time of prosperity. This is when all the companies are doing
well, and when all of the shares are worth way more. This is how most attempt
to become rich. Sadly, some companies just become private (Conexant) and buy
back shares at very low rates, and you become poorer.
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