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Online Gold Trading And Gold Futures Investing


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Online gold trading is for the most part trading in futures. That means buying gold for delivery next month to many months later. You are hedging, meaning if you need gold you are assured of a supply through the futures contract. If the price goes up by the time you take delivery, your hedge was unsuccessful. If the price is coming down, then it would be in your interest to take delivery. Most people do not take delivery. Gold is traded worldwide. When you see prices for gold displayed it is from the nearest month with the most activity, usually the next month.

Online gold trading is similar to any other futures contract. A baker needs wheat. He buys futures and assures himself of a supply. If the price goes down he has done well. If it goes up and becomes too expensive he can sell or keep the high-priced wheat, which is better than having no wheat and going out of business. When oil was high the airlines hedged and some of them lost a lot of money for buying futures in oil, that has since come down quite a bit. It takes two to make a contract and each is betting against each other on price.

At the close of the day you get a gold price. This is the spot price. Again this spot price is of the nearest month with the most trading activity. The gold quote usually comes from the Comex Exchange of NY. Most all trades are online and computer generated. The computer automatically buys and sells gold futures contracts on how it was programmed for the clients. It is a risky but exciting, when you are involved in online gold trading. That is why you see many monitors in front of traders. You must keep on top of the price all the time. A few cents in either direction can make you wealthy or bankrupt you.

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