Forex Basics

Discussions about trading the Forex markets.
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Joined: Thu Apr 17, 2003 4:23 am

Post by Moodaeng »

June 2 (Bloomberg) -- The hedge fund of Paul Tudor Jones,
which manages $8 billion of assets, views gold as effectively
another currency, following moves in foreign exchange markets
rather than supply and demand of bullion.
Gold can be understood best when compared with currencies
such as the euro, Tudor Investment Corp. commodities strategist
Steve Mathews told a conference of the London Bullion Market
Association in Lisbon.
``For us as a trading institution, gold behaves as a foreign
exchange instrument, not as a regular commodity like wheat or live
cattle,'' Mathews said. ``The fundamentals put it outside the
range of commodity trading for us. Which doesn't mean we don't
trade it, we do, but it's as a foreign exchange, not as a

gold bug

Post by Jester »

If you blur your eyes a little you can see how gold is another currency, but then so is PA and PD. Right?
There's a heavy cost of carry with metals that's almost always in one direction, unless there is a squeeze, if you're long metal you're paying the carry (contango). This is different than currencies, plus another big distinction is that virtually all the gold in the world is still in existence. Big supply weighing on economic demand.
Plus, central governments will sell their gold reserves when they need cash but they won't sell their currency reserves when they need cash (they'll issue bonds).
Gold would be the global currency if investors lost faith (no, not c.f.) in all other paper money.

I must be doing something wrong because I trade currencies the same way I trade all other financial products. A trend is a trend.

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