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Forex Basics
Currency and Precious Metals as Investments
by InvestorGuide Staff (Write for us!)
(Click on the links within the article to get definition of that word)
Currency
Tradingcurrency is a speculativeinvestment. Investors attempt
to buy and sell currency at the appropriate time in order to take advantage of changes in the exchange rate. If an investor thinks that a currency will become more valuable relative to the currency that his money is currently in, he might want to convert to that new currency, wait for the change to take place and then convert back. Of course, this is a very risky investment because there are no guarantees as to how currency values will change.
It is important to keep in mind that precious metals do not have any intrinsic value. While the value of stock is based partially on its expected future dividend stream, and real estate's value is based partially on its ability to generate revenues through rental, precious metals have value only because (and as long as) other individuals desire them.