Today, there are a number of different ways to invest in gold, from futures to CFDs.
Physical ownership – The most traditional way of investing in gold is by purchasing the metal itself in the form of gold bullions or coins. The upside to this is that you don’t have to worry about brokerage fees. Physical gold, however, carries with it several associated costs like buying the safe box, insurance and the risk of theft.
Futures contracts – A Gold futures contract is an agreement between two parties to exchange a specific amount of gold at a set price on a predetermined date. Traders invest in futures with the aim of selling them on and making a profit as the value increases. The COMEX Gold futures is the benchmark futures contract for gold prices and is traded on the Chicago Mercantile Exchange.
Gold CFDs – Contracts for difference (CFDs) present a more accessible and affordable way to trade gold without investing in the underlying asset or contract. Instead, you’re simply trading on the price movements of golds, making CFDs popular among day traders. With online CFD brokers, you can trade gold with leverage, meaning you borrow capital from the broker to make larger trades. You can also go short, meaning you can speculate on the price of gold going down.
Gold ETFs – Gold exchange-traded funds (ETFs) are funds backed by gold which allow investors to track and reflect the price of gold without owning the underlying asset. The oldest gold ETF is the SPDR Gold Shares (GLD), which trades on the New York stock exchange. Each share represents one-tenth fo an ounce of gold.
Mining stocks – Another way to indirectly invest in gold is to buy stocks of mining companies, which you can either buy or trade as CFDs. However, gold mining stocks don’t necessarily follow the same price trends as gold itself.
The Advantages Of Trading Gold CFDs
Trade Gold CFD is more flexible than the other ways.
CFD( Contract for difference) is a financial tool, which is a popular form of derivative trading. You can trade any financial markets with CFD, such as shares, commodities, crypto, forex. Gold is also not exceptional.
This type of trading involves speculating the price of gold spot. You have options to go long or go short the gold price in the changing market. The profit you earned is the difference between the buying and selling prices.
The biggest advantage of the gold CFDs is that it has no expiration date. Gold CFDs investments can be held as long as the trader wishes. It’s the trader who decides when is the right time to close his positions based on the prevailing market rates as well as desired profit margins.
CFDs are traded on a margin. Every trader is required to maintain a given minimum level. The deposits made to their accounts should not fall below this minimum level, otherwise, there will be margin calls made. The trader needs to cover these costs or their positions will be liquidated.
Normally, the margin ranges from 0.5% to 30% thus enabling the trader to take advantage of the leverage by magnifying the potential profits or losses in a trade.
Therefore, CFD trading is also considered as margin or leverage trading. High risks are along with high profits. If you are interested in gold trading on CFD, remember that it should not be used as a hold strategy. It is feasible to use as a short-term or medium-term strategy as long as you own proper money, risk management, and use stop losses.
The advantage of EBC
EBC offers more than 100 assets for trading, with industry-leading spreads, low commissions, and negative balance protection to give clients the best experience and chances of prosperity.