Gold has played a crucial role in human commercial relations since the rise of ancient civilizations in the Middle East over 3,000 years ago and this makes it the oldest form of money recognized at present. Gold has generally been regarded as the ultimate “safe haven” asset, since it has a vast track record as a “store of value” in times of war conflicts, natural disasters as well as during the economic and cultural rise and downfall of a number of great empires.
Whether in physical form as a piece of jewelry, or in a portfolio at a brokerage firm, Gold’s value constantly changes, at times quite formidably. These fluctuations are skillfully exploited by some investors to earn a profit by simply speculating on the precious metal’s price movement, while other market players may purchase Gold as a “hedge”. What the latter means is that if their portfolio is comprised predominantly of Stocks and there is stock market turmoil, their Gold holdings could make up for those losses as the metal’s value increases.
Regardless of the fact Gold has preserved its value for centuries, investors’ interest in the commodity has seen peaks and troughs. For example, during the period between the early 1980s and the early 2000s, there has been little interest in investing in the safe haven metal due to robust and stable economic growth and bullish stock markets. During that period, the price of Gold moved within the range between $300 and $500 per ounce.
Investors’ interest in the metal rose slowly through the 2000s and skyrocketed in 2008 during the Great Financial Crisis. The price of Gold initially peaked just above $1,900 per ounce in late 2011 and then reached a record-high level of $2,074.88 in August 2020.
In the current guide, we will discuss the major factors that affect Gold’s valuation, the most popular ways to trade the commodity and we will also offer several Gold trading strategies.
Gold is arguably among the most challenging financial assets to evaluate. On one hand, Gold shares certain similarities with traditional currencies such as the US Dollar, the British Pound and so on, since it is durable, portable, uniform worldwide and broadly accepted. Yet, unlike traditional currencies, Gold is not underpinned by an underlying economy of consumers, businesses and infrastructure.
On the other hand, Gold shares similarities with other commodities such as Oil or Wheat, since it is extracted from the ground and is standardized in terms of physical characteristics. Yet, unlike other commodities, Gold’s value often fluctuates without any link to its industrial supply and demand. Reality is that only 10% of the Gold worldwide is used in industries such as electronics, mostly because of its conductivity and anti-corrosive properties. And the rest of the global Gold is either used in the jewelry business or is held for investment purposes.
Gold as a “hedge”
Many investors tend to focus on Gold because of its traditional role as a “hedge”. This means positions in Gold are expected to offset any losses that may occur in other asset classes which comprise an investor’s portfolio. It is so, as Gold’s price is inversely correlated to the price of some other asset classes. When those assets depreciate, Gold will usually gain in value, and vice versa.
One particular asset class that has a negative correlation with Gold includes fiat currencies such as the US Dollar. We shall discuss that relation in more detail in the next section of the guide.
Gold can also be used as a hedge against inflation. Central banks have the ability to increase the money supply in order to support economies, when such aid is required. Since the amount of available Gold is limited, in case the money supply is increased even several times, the price of Gold should also increase.
And let us not forget that another group of traders may use Gold for purely speculative reasons. They will trade the commodity in accordance with their expectations of the direction of the market. When the price of Gold almost doubled during the Great Financial Crisis in the late 2010s, that surge was driven not only by investors’ Gold hedges, but also by traders who detected the trend and looked to enter the market early in order to benefit at a later stage from the overall risk aversion.
What is a Gold reserve?
The amount of physical Gold owned by a particular government or national central bank in order to support the value of domestic currency represents that nation’s gold reserve. During gold standard eras, a country’s gold reserve was used to redeem commitments to pay noteholders, depositors or trading peers. The gold reserve comprises a particular part of a nation’s Foreign Exchange reserve (which is meant to balance its payments, influence its currency’s foreign exchange rate and maintain confidence in local financial markets).
April 2021 data from World Gold Council shows that central banks worldwide acquired 272.9 tonnes of gold in 2020.
Now let us take a look at the 10 countries having the largest Gold reserves worldwide. Since the International Monetary Fund (IMF) is not a country, it is not featured in the table below.
Since 2011, the gold holdings of the International Monetary Fund have remained constant at 2,815 tonnes, which would have ranked it third on the list.
|Country||Gold Reserve in Tonnes||% of Foreign Exchange Reserve|
The relation between Gold, interest rates and the US Dollar
History has shown that one of the key factors to determine the price of Gold is the level of real interest rates, or interest rates without taking into account the rate of inflation. In periods of high real interest rates, investment alternatives such as cash or government bonds tend to offer satisfying returns.
However, in periods of low real interest rates, investment alternatives such as cash or government bonds tend to offer low or even negative returns. As a result, investors are urged to seek out other ways to preserve their wealth. Most frequently, Gold will be their choice of an asset.
At a time when yields on US government bonds are decreasing (either because inflation expectations are deteriorating, or macroeconomic data is suggesting bleak outlook), the price of Gold tends to rise. Since the precious metal pays no interest, lower interest rates and lower bond yields usually diminish the opportunity cost for investors of holding the commodity. Almost always when there is some notable drop in global bond yields (sometimes to levels well below zero), investors look to buy Gold in an attempt to hedge against an environment of decreasing returns.
Conversely, in case global bond yields are rising due to an improvement in macroeconomic, political or health conjuncture, the opportunity cost of holding Gold also increases and, thus, this reduces its appeal to investors.
Another key relation we should point out is that between Gold and the United States Dollar. At a time when the US Dollar is being sold (especially against currencies such as the Chinese Yuan or the Japanese Yen), the price of Gold tends to rise due to increased buying interest. It is so, because a cheaper US Dollar makes Gold more attractive for international investors who hold other currencies because of their higher purchasing power. On the other hand, a stronger US Dollar reduces the appeal of Gold for those holding other currencies.
It is important to note that the majority of online brokerages now offer Gold Contracts for Difference (CFDs) available to trade, which are usually denominated in US Dollars, Euros, British Pounds, Japanese Yen and so on. Those brokerages simply convert the USD-based price of Gold into EUR, GBP or JPY in real time by using the current EUR/USD, GBP/USD or USD/JPY spot exchange rate.
If you buy Gold CFDs in the weakest currency, or sell Gold CFDs in the strongest currency, you will actually be able to earn the maximum profit from every trade in the commodity. For instance, if you are convinced that the Euro will lose value against other major currencies during the upcoming week, then you may prefer to purchase Gold in Euros (to trade XAU/EUR) rather than to purchase it in US Dollars (to trade XAU/USD). As a result, in case the EUR/USD exchange rate depreciates and the price of Gold rises over the upcoming week, you would have generated a larger return (in %) when trading XAU/EUR than what you would have earned if trading XAU/USD.
How can you trade Gold?
As a trader, you have a number of options to speculate on the price of Gold. Those include trading Gold stocks, Gold ETFs, Gold Futures, Gold Options, Gold CFDs as well as physical Gold (bullion bars or coins).
Option 1: Trading Gold Stocks
To own a portfolio of Stocks that perform in line with Gold prices is one possible way to take advantage of Gold market movement. Such stocks are usually those of Gold mining and exploration companies. Regardless of that the gold deposits owned by such companies may still not be extracted from the ground, if the price of Gold moves, so shall the share prices of those companies.
Still, we should note that the correlation between the price of Gold-related stocks and the commodity itself could vary. Let us not forget that shares can also be affected by other price-driving factors such as broader stock market volatility, for instance.
Some of the leading Gold explorer and mining Stocks you may consider include:
|Gold Stock||Information||Established in||Listed at|
|Barrick Gold||The biggest gold mining company worldwide, based in Toronto. Initially, it was established as an oil and gas company.||1983||New York Stock Exchange and Toronto Stock Exchange|
|Newmont Mining||Gold mining company, headquartered in Colorado, US. It is the only gold company included in the S&P 500 Index.||1916||New York Stock Exchange|
|Newcrest Mining||A leading gold mining company in Australia. Initially, it was a subsidiary of Newmont Mining Co.||1966||Australian Securities Exchange in Sydney|
|AngloGold Ashanti||Gold miner and explorer, headquartered in Johannesburg. The company operates 17 mines located in 9 countries.||2004||Johannesburg Stock Exchange, New York Stock Exchange and Australian Securities Exchange|
|Polyus Gold||A gold mining company, based in Moscow. Polyus Gold is in fact the biggest gold miner in the Russian Federation.||2006||London Stock Exchange and Moscow Exchange|
Option 2: Trading Gold ETFs
Exchange traded funds (ETFs) represent a basket of securities (company shares) that can be traded on stock exchanges. Within an ETF, the number of shares per company usually varies, depending on the available shares of all companies included.
ETFs offer a good opportunity to hold a position in Gold, since you will not have to pay fees on a vault facility or be exposed to risks related with storing physical Gold at your home. Additionally, ETF real-time pricing will allow you to easily keep track of the value of your holding.
The five largest Gold ETFs in terms of total assets under management include:
- SPDR Gold Trust
- iShares Gold Trust
- SPDR Gold MiniShares Trust
- ETFS Physical Swiss Gold Shares
- GraniteShares Gold Trust.
Option 3: Trading Gold Futures
Gold Futures are derivative instruments, which enable traders to speculate on future price movement of the commodity by purchasing exchange-traded contracts. The latter are usually traded on exchanges such as the Chicago Mercantile Exchange (CME), Tokyo Commodity Exchange, or the London Metal Exchange (LME).
When you buy a Gold futures contract, you will have the choice to accept the agreed-upon delivery date, or to perform a “rollover” – meaning, to extend the contract for a later delivery date.
Now let us take a look at the contract specifications for Gold Futures, E-Mini Gold Futures and Micro Gold Futures, all of which trade on the COMEX division of the Chicago Mercantile Exchange.
|Gold Futures||E-Mini Gold Futures||Micro Gold Futures|
|Contract Unit||100 troy ounces||50 troy ounces||10 troy ounces|
|Price Quote in||US Dollars and Cents per troy ounce||US Dollars and Cents per troy ounce||US Dollars and Cents per troy ounce|
|Minimal Price Fluctuation||$0.10 per troy ounce||$0.25 per troy ounce||$0.10 per troy ounce|
|Listed Contracts||Delivery is usually during the current calendar month; the next two calendar months; any February, April, August, and October falling within 23 months||Delivery is usually in any February, April, June, August, October, and December falling within 24 months for which a 100 Troy Ounce Gold Futures contract is listed||Month-to-month contracts listed for any February, April, June, August, October and December in the nearest 24 months|
|Settlement Method||Deliverable||Financially Settled||Deliverable|
Option 4: Trading Gold Options
A Gold options contract represents an agreement between two parties to conduct a potential transaction on a particular quantity of Gold. The Gold options contract is a derivative instrument, whose underlying asset is either physical Gold, or futures on physical Gold. Every options contract features details such as quantity, delivery date and a strike price, all of which are preset. These contracts are traded on derivatives exchanges across the globe. In the United States, for instance, Gold options are listed on the COMEX exchange.
There are two main types of Gold options – call and put options. Gold call options provide their holder with the right, but not the obligation, to purchase a particular amount of the commodity at the predetermined price (strike price) until the option expires. A Gold call option tends to be more valuable when the precious metal is in an uptrend, because the holder locked in a buy at a lower price. Gold call options buyers have the right, but not the obligation, to buy the particular quantity of Gold. Gold call options sellers, on the other hand, are obligated to sell the commodity at the preset price, when the other party in the agreement demands delivery up to the option’s expiration date.
Gold put options provide their holder with the right, but not the obligation, to sell a particular amount of the commodity at the predetermined price (strike price) until the option expires. A Gold put option tends to be more valuable when the precious metal is in a downtrend, because the holder locked in a sell at a higher price. Gold put options buyers have the right, but not the obligation, to sell the particular quantity of Gold. Gold put options sellers, on the other hand, are obligated to buy the commodity at the preset price from the other party in the agreement.
In case neither the holder of the call option nor the holder of the put option exercises their rights, the options contract will expire as worthless.
Option holders will be willing to exercise their gold option rights only if they can benefit from current market conditions. In case the precious metal is trading at a significantly higher price than the option’s strike price, the option holder would benefit if he/she chooses to exercise the option. The investor will then be able to sell the Gold on the open market for a profit.
However, in case Gold is trading at or in proximity to the option’s strike price, the option holder would either break even or register a loss (when taking into account the initial cost to buy the option).
Option 5: Trading Gold CFDs
Gold Contracts for Difference (CFDs) represent leveraged products, which require traders to ensure a certain small percentage of the overall trade value, also known as a margin requirement.
CFDs are derivative instruments that allow you to speculate on the price movement of Gold without the need to actually own the asset (physical Gold, Gold shares, Gold ETFs, Gold Futures or Gold Options).
The value of a CFD represents the difference between the price of Gold at the moment of purchase and the current market price. That difference can be based on Gold’s spot price, Gold Futures, Gold ETFs or Gold mining stocks.
A key advantage of trading Gold CFDs includes the lack of storage costs or trading commissions. The only cost you will pay is the bid-ask spread, which will vary depending on the online brokerage company.
However, on the downside, CFD trading carries a high risk of rapid capital losses, as leverage is used. Therefore, it is highly recommended that you obtain as much knowledge as necessary about how these derivative instruments work before you begin trading them with real money. A good starting point would be opening a demo account with a reputable online brokerage, on which you will be able to test both that broker’s platform features and various Gold trading strategies risk-free (by using virtual funds). Once you obtain enough confidence to trade with real money on a live account, you should closely monitor your risk exposure and always use all the available tools to manage the risks of CFD trading.
Note that Gold CFD trading has been prohibited in the United States since the passing of the Dodd-Frank Act in 2011. On the other hand, US residents are able to trade gold physically, via derivatives such as Futures and Options, as well as to trade Gold mining shares.
Option 6: Operating with physical Gold
And lastly, you can buy and hold physical Gold in the form of bullion bars or coins. As a bullion trader, you may opt to store your Gold securely in a safe at home, or spend extra money to rent an external high-security storage facility. Some of the popular online Gold bullion dealers you may check out include:
- GoldBroker.com – vaults located in Zurich (Switzerland), Singapore Freeport, New York (US) and Toronto (Canada); storage fees from 0.95%;
- BullionVault.com – bank-level vault security; 0.50% fee on the first transaction of $75,000 or currency equivalent.
Additional options include Gold spread betting and trading Gold at its spot price in a particular currency.
If you reside in the United Kingdom or Ireland, another popular way to trade Gold includes spread betting. By opening a spread betting account with some of the leading online brokerages such as CMC Markets, you will be able to speculate on Gold’s price movement without the need to actually own the physical asset. When you spread bet on Gold, you can also benefit from:
- no capital gains tax on profits from spread betting;
- no trading commissions charged;
- no obligation to pay stamp duty, as you simply speculate on price movement of Gold without owning the real asset.
Trading Gold in pairs against a particular currency such as the US Dollar or the Euro is very similar to Forex trading. Instead of two currencies, the pair will include the precious metal and its spot price in a given currency. The spot price represents the price at which Gold can be sold for immediate delivery. The most popular metal currency pairs include Gold/US Dollar (XAU/USD), Gold/Euro (XAU/EUR), Silver/US Dollar (XAG/USD), Silver/Euro (XAG/EUR) and etc.
Gold trading hours
Gold trading, unlike other daytime market segments, is available to traders 24 hours per day. Yet, we should note that some derivatives markets (such as Futures) have specified trading hours, depending on the exchange where they are traded. For instance, Gold futures on CME’s COMEX trade from Sunday to Friday between 5:00 pm and 4:00 pm Central Time.
Is Gold highly liquid and can it be traded in a short term?
Gold, along with other precious metals such as silver, platinum and palladium, is a highly liquid asset and is also regarded as one of the most inflation-tolerant physical assets. The price of Gold tends to change at a steady rate over time, which means one cannot expect to see some abrupt movement up or down (unlike other assets such as cryptocurrencies, for instance). Despite that the precious metal is often considered as a lower-risk speculative trading instrument, diligent forecast and precise timing can turn it into a profitable asset which to trade in a short term.
Yet, we should note that some day traders may avoid taking positions in Gold due to the metal’s relatively low volatility in a short term.
Are there any cons of trading Gold? Are Gold coins more valuable than Gold bullion?
Similar to other commodities, Gold also has certain disadvantages. Trading or storing some forms of Gold can be a costly experience, more specifically when it comes to physical Gold such as coins and bullion bars.
Some traders consider Gold’s historically volatile price as a disadvantage as well.
When it comes to physical Gold, coins tend to be a bit more valuable than bullion bars due to the extra minting costs related to creation of coins. Still, Gold traders may hold both coins and bullion, as both assets can be of different quality. Also, over time, Gold coins tend to have artistic and sentimental value.
Now, let us provide a quick summary of the advantages and disadvantages of Gold trading.
- Can be used as a hedge against economic and political turmoil, natural disasters
- Can be used as a hedge against inflation
- Can hold its value in time
- A liquid investment regardless of its restricted supply
- Protects investors’ wealth and diversifies investors’ portfolio
- Not correlated to the stock market and some other asset classes
- It is not a passive investment
- Trading is associated with currency risk due to a tight relation with the US Dollar
- It is not an yielding instrument (pays no interest)
- Gold ETFs can be associated with higher trading fees
- Historically, it has considerably underperformed other market segments such as stocks and bonds over a longer period of time
Trading Gold with IC Markets, a leading CFD provider
IC Markets, one of the leaders in online Forex and CFD trading services worldwide, offers some of the best conditions to trade Gold via CFDs. If you select this brokerage, you will be granted access to:
- deep interbank liquidity and raw pricing in Gold on the Raw Spread Account, with spreads as tight as 0.0 pips;
- leverage ratios of up to 1:500;
- exceptional order execution with low latency and no dealing desk intervention;
- no restrictions on trade sizes – micro lots trading is allowed for tighter risk management;
- sound environment for expert advisor development and backtesting, allowing for automation of your Gold CFD trades;
- no restrictions on trade orders – a condition that would best suit trading styles such as scalping. You will be able to place your Stop Loss and Take Profit orders at the closest pip distance possible from the current market price.
Opening a live account with IC Markets is a quite fast and effortless process, including several steps:
- Providing Contact Details – country of residence, first and last name, email address and telephone number;
- Providing Personal Details – date of birth and address;
- Choosing an account type – individual, joint or corporate;
- Configuring the trading account – choosing a trading platform, an account type (Standard or Raw Spread) and a base account currency;
- Providing information about your trading experience and selecting a security question;
- Providing proof of ID (Passport, or National ID card, or Driver’s License) and proof of residency (utility bill, or bank account statement), which IC Markets will have to verify;
- Once you have filled the profile form and uploaded your identifying documentation, you will have to wait until the brokerage verifies your live account. That procedure takes one business day;
- Once the review is complete, you can fund your account and start trading Gold CFDs.
You will also be able to test Gold CFD trading strategies risk-free on IC Markets’ Demo Account by using virtual funds.
Next, we shall provide several Gold trading strategies, including ones based on technical studies. Let us begin with one of the most popular trading approaches.
The Buy-and-Hold strategy
Due to historical reasons that make the precious metal an attractive investment, some traders may prefer to purchase a particular amount of Gold and hold it over time. When employing such a strategy, finding the right market timing is a key moment, but it may not present itself immediately.
To identify a good opportunity to buy Gold, take a look at one of the larger chart timeframes, the weekly chart for instance, and deploy the Bollinger Bands technical indicator. If you open a long (buy) position in Gold at a moment when the commodity is in proximity to the lower end of the Bollinger Band range may turn out to be a suitable trade entry point.
Paying attention to the Gold/Silver ratio
Another strategy, which long-term traders may employ, includes keeping track of the gold/silver ratio. The reason to do so is because, from historical perspective, both precious metals have been regarded as stores of value with commercial uses.
The Gold/Silver ratio reflects the proportional relationship between the spot prices of gold and silver, or how many ounces of silver can be purchased with a single ounce of gold.
Traders will develop strategies based on which metal is cheaper compared to the other. A low ratio indicates that Gold may be undervalued, or Silver may be overvalued, and vice versa.
If you own 1 ounce of Gold and the ratio rises to historically high levels, say 150, then you would sell that 1 ounce of Gold for 150 ounces of silver. And, if the ratio drops to historically low levels, say 75, then you would sell your 150 ounces of silver for 2 ounces of gold.
A simple Gold trading strategy that uses SMA, EMA and MACD indicators
Let us take a look at the 4-hour chart of Spot Gold (XAU/USD). For this trading strategy we have selected the following technical indicators:
- a 100-period Simple Moving Average (SMA)
- a 200-period Simple Moving Average
- a 15-period Simple Moving Average (red on the chart)
- a 5-period Exponential Moving Average (EMA) (black on the chart)
- the Moving Average Convergence Divergence (MACD) indicator with its default settings (short term – 12; long term – 26; MACD SMA – 9).
You should consider taking a long (buy) position in Gold, when:
- there is a cross between the 5-period EMA and the 15-period SMA from below to the upside and the current candle has closed;
- there is a cross between the two lines of the MACD as well.
Note that the MACD lines may cross earlier or after the cross of the 5-period EMA and the 15-period SMA. Also, you should not enter the market, if the two crosses are not present. You should place a Stop Loss at the closest level of support, while the distance should be at least 40 pips. You may consider this as a precaution in case an abrupt considerable move occurs. The long position should be closed only when two crosses (opposite to the abovementioned) are present. If there is only one cross, you should keep the position active.
You should consider taking a short (sell) position in Gold, when:
- there is a cross between the 5-period EMA and the 15-period SMA from above to the downside and the current candle has closed;
- there is a cross between the two lines of the MACD as well.
You should place a Stop Loss at the closest level of resistance, while the distance should be at least 40 pips. Again, the short position should be closed only when two crosses (opposite to the abovementioned) are present.
Additionally, note that you should not make an entry, when Spot Gold is trading at a distance closer than 25 pips from the 100-period Simple Moving Average or the 200-period Simple Moving Average.
Another Gold trading strategy that relies on EMA and RSI indicators
In case you are short of time to closely follow Gold’s intraday price developments, then this strategy may be of some use to you. Let us take a look at the 1-day chart of Spot Gold. For this trading strategy we have selected the following technical indicators:
- a 5-day Exponential Moving Average (EMA) (red on chart)
- a 12-day Exponential Moving Average (black on chart)
- the Relative Strength Index (RSI) with a time period set to 21.
You should consider taking a long (buy) position in Gold, when:
- there is a cross between the 5-day EMA and the 12-day EMA from below to the upside and
- the RSI currently inhabits the area above 50.00.
You should exit your long position, when the two Exponential Moving Averages cross in the opposite direction (from above to the downside), or the RSI reading slips below the 50.00 level.
The chart below visualizes a long trade in Gold, based on this strategy.
You should consider taking a short (sell) position in Gold, when:
- there is a cross between the 5-day EMA and the 12-day EMA from above to the downside and
- the RSI currently inhabits the area below 50.00.
You should exit your short position, when the two Exponential Moving Averages cross in the opposite direction (from below to the upside), or the RSI reading surges above the 50.00 level.
Gold trading strategy that combines RSI and Bollinger Bands
This time we will be examining the 30-minute and the 4-hour charts of Spot Gold. For this strategy we will be using the following technical indicators:
- Relative Strength Index (RSI) with a period set to 14, overbought level at 70.00 and oversold level at 30.00;
- Bollinger Bands with default settings.
The 50.00 level of the RSI will be used to determine if the price of Gold is trending up or down. By looking at the 4-hour timeframe of Gold, if we see that currently the RSI reading is above the 50.00 level, then the precious metal is in a bullish trend. Conversely, if the RSI reading is currently below the 50.00 level, then the market is in a bearish trend.
In order to enter the market, we will use the 30-minute chart of Gold.
If we have a bullish trend and a candle closes below the lower band of the Bollinger, we need to focus on the next candle. In case it closes above the lower band, this can be considered as a long entry setup. The Stop Loss will be placed on the low price of the candle, which closed below the lower band of the Bollinger.
In case we have a bearish trend and a candle closes above the upper band of the Bollinger, we again focus on the next candle. If it closes below the upper band, this can be considered as a short entry setup. The Stop Loss will be placed on the high price of the candle, which closed above the upper band of the Bollinger.
If you are just starting out, then perhaps trading Gold via CFDs may be the most suitable (the cheapest and most accessible) option for you. But still, since CFDs involve a high risk of losing capital rapidly due to leverage, you should approach these derivative instruments with strict risk management (appropriate position size, use of all risk tools available – Stop Loss, Trailing Stop, Guaranteed Stop and so on) as well as with a plain trading plan.
Additionally, choosing an online CFD provider with strong regulation and good reputation is a key moment to consider. This way you will have a piece of mind you are working with a company that conducts business in a transparent and ethical manner. A profound research of different brokerages is always recommended before you invest real money and start trading with the use of a given broker’s software.
Last but not least, you should invest as much time as possible in a quality education in order to understand the factors that drive the Gold market as well as acquire skills that will aid you in choosing your trades properly.