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

Some things tend to repeat themselves. Summers are almost always more warm than winters. The rainfall usually peaks during specific months of the year. Birds migrate in the anticipation of the fall. But seasonality, this inherent tendency of repetition, is not restricted to the weather or wildlife. It turns out that seasonal patterns might transpire into the forex market and provide suggestions for the U.S. dollar.

Velocity means speed. And indeed, velocity of money refers to how fast money changes hands and how fast it passes from one holder to the next. It is commonly defined as the rate at which money is exchanged from one transaction to another. Simply put, the velocity of money is the number of times one dollar is spent to buy goods and services per unit of time.

Volatility is the relative rate at which the price of a security moves up and down. The more the price moves up and down, the more volatility it is considered to have.

Volume is the overall sum of all transactions executed in the market (or a single company's stock) during a given period of time, which shows us market power (importance). In case of gold futures market, the gold volume represents the amount of contracts that were traded in a given period. The greater the volume, the more powerful the market. Volume plays a significant role in the confirmation of a suggested price movement.

The World Gold Council (WGC) is the market development organization for the gold industry, based in London. It is a non-profit association of the world's leading gold producers, set up to provide industry leadership and stimulate the demand for gold. For example, the WGC is the creator of the first gold ETF.

The Philadelphia Gold and Silver Index (XAU Index) is a market capitalization index of precious metal mining company stocks. As its name suggests it includes both gold and silver mining companies.

The yen is the currency of Japan, officially adopted in 1871. The word “yen” means “circle” or “round object”. The currency is managed by the Bank of Japan, based in Tokyo, and it is one of the most difficult national currencies to counterfeit. Its international code is “JPY”. Just like the U.S. dollar or the euro, the yen is fiat money. Since it is a currency of one of the largest economies in the world, the yen is used as a reserve currency along with the U.S. dollar, the euro, and the pound sterling. It is also the third most traded currency in the foreign exchange market, after the greenback and the euro. Indeed, it is the second most widely held currency, after the U.S. dollar. The USD/JPY is also one of the most popular pairs forex trading.

The old joke is that the stock market has predicted 9 out of the last 5 recessions. However, the yield curve have much better accuracy, as nine inversions of the yield curve since 1953 predicted eight recessions and one credit crunch followed by economic slowdown.

The zero interest-rate policy (ZIRP) is a monetary policy maintaining nominal short-term interest rates at zero. The global financial crisis that began in 2007 prompted the major central banks to take unconventional policy measures (although the ZIRP was first used by Japan in the 1990s). One of them was the reduction of short-term interest rates to about zero. The Fed slashed the federal funds rate to about zero in December 2008 and maintained it at such level until December 2015 (see the chart below). However, that hike was modest, so it did not normalize the level of interest rates.