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Gold Commodity Trading


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Gold Trading Is A Good Short Term Investment

Gold Commodity trading, often also known as Trading Gold Options or Gold Futures Trading, is buying futures or contracts for gold delivery. Like all futures you can sell before and not take possession of the actual gold. Gold trading in this way is has its advantages and disadvantages. Short term and medium term, there is a lot of profit to be made off of gold bullion trading and trading gold commodities. There is a lot of leverage in this kind of a market and you can buy on margin. This means you can purchase more gold than the money you are putting down. Just look at the Forex and Monex market to see exactly what this means, for a minimum payment quite often the will "give" you a few thousands of dollars to invest. This makes for large profits but if you get a margin call for more money because the price of gold went down, you can lose a lot of money. This kind of trading is for experts with strong stomachs. It is nothing short of gambling to the untrained gold investor. Each contract is for 100 troy ounces (gold being about $960 oz). You can do the math and see the potential profits that can be made on the short term. In this economy, gold prices look like they will steadily rise in the future, so perhaps it is less of a gamble. Once the economy bounces, the price of gold as a commodity for trading will likely drop and could become a more risky venture.

Buying gold is also gold commodity trading, since you might sell one day completing the trade on the other end. Here you can purchase bars, coins, ingots, gold mining stocks, gold mining stock funds. If you purchase gold mining stocks you are in reality involved in gold commodity trading though not investing in actual gold bullion. Gold being a commodity and stocks are traded daily. If the price of gold is rising the gold stocks will rise with them, not necessarily at the same percentage. There are always external factors to deal with. For example a strike at a gold mine will raise the price of gold commodities futures, but the stock of the company effected by the strike might go down. On the other hand companies might be putting out excellent Guidance for future earnings and their stocks will rise, but that day the price of gold is down due to a positive economic report.

At the present time gold stock companies and all trades involving gold will trend upward. Your physical gold will also trend in this direction. An international incident will make gold go up. An improving economy will have gold moving down. Over the past few years gold has outperformed the equities.

Longterm Gold Commodity Investments

In the longterm though, there is no better gold investment than buying actual physical gold bullion. This is where the real protection lies, as any reader of this blog already knows. If your goal is to protect your assets for years to come, dabbling in commodity trading is not a long term investment at all.

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