From the May 2013 issue of Futures Magazine • Subscribe!

10 pearls of wisdom for trading metals

6. Saber-rattling in North Korea

Speaking of the possibility of war, North Korea is at the top of the list of countries Gero is watching. Because war can create a definite sense of uneasiness, especially with the economy, he says any sort of saber-rattling has the potential to move markets. “It’s a matter of whether people would start to buy and hoard gold because they would have fears of unrest,” he says. “It’s the perception more than anything else, especially the perception of how the United States is reacting.”

Although North Korea is the main country he is watching now, that is subject to change should political unrest develop somewhere else in the world. But unrest alone does not mean a move in gold; last year’s Arab Spring or the current unrest in Syria, haven’t significantly affected gold, Gero says.

7. Taxes and demand in the jewel of the Orient

India is important because it is one of the largest consumers of gold, along with the United States and China. As the Indian economy has emerged over the last decade, the populace has turned to gold as an important investment option. Also,  gold, in the form of jewelry, always has seen high demand in the country during certain seasons, particularly the wedding season in late summer through the fall.

As such, any talk of raising taxes on gold imports can have an impact on physical demand for the metal in the country. “When India passed the tax on gold, the shops were not selling for a while. So it affected physical demand,” Gero says.

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