Today more and more people invest their time and money into trading. However, first, you have to choose the direction. The gold market is the foundation and long-term reserve that measures the economic situation of states and partnerships. Gold is both a saving instrument and an indicator of wealth. Learn more about profitable trading strategies in the article “How To Invest In Gold”.
Secrets To Gold Trading
First, start with reading and listening to top financial analysts and experts, who analyse the gold market daily, and studying the methods of technical and fundamental analysis of the market. That will provide you with understanding that gold trading is easy and there are different ways of buying and trading gold. Here are a few examples to start with.
Gold Bullion
You can buy bullion can from banks or at the exchange. It is real physical gold, which you can touch and store in your safe or a safe deposit box. However, prepare to spend money on insurance and secure storage.
Spot Gold
Spot gold price is the current price of gold, formed by the supply and demand ratio at a given time. It changes almost continuously during the day, but it becomes a fixed value at the closing of a spot transaction. The price of precious metals is highly volatile, so it is advisable to track its changes in real time using online gold price charts.
Gold Futures
These are futures contracts in which the buyer undertakes to buy an asset from the seller at a predetermined price. The profit is formed by the difference between the contract purchase and sale price.
Advantages And Risks Of Gold Trading
The key advantages of gold trading are correlation with oil prices, the dollar index and high liquidity. Gold is the most stable reserve currency that does not lose its value for centuries. It is an economically independent asset, so it is attractive to central banks as an instrument of risk diversification.
It is important to keep in mind that many brokers usually have rather high spreads for trading this metal, and the leverage in transactions with gold is much lower than in transactions with currencies.
The Main Reasons For Gold Volatility
Gold has been one of the most profitable commodities this year as the coronavirus outbreak hit the global economy, prompting central banks and governments to roll out incentive measures. Experience has shown that gold drop slower than other assets and recovers quickly — as soon as the crisis passes and the incentive measures begin to work. Its decline presents a problem for investors in the metal. However, the gold spot price in summer continues to renew its historical highs. Since the beginning of the pandemic, gold prices have added 30%.
Bitcoin Vs. Gold Volatility
Gold and bitcoin have a lot in common: their value lies in their scarcity. However, the volatility of bitcoin must come closer to the fluctuations in the price of gold in order for more institutional investors to believe in the cryptocurrency. Bitcoin carries huge risks for traders remaining extremely volatile, rising and falling by 10% a day, while gold remains a reliable asset. Any serious investor would think twice before risk betting on such a volatile asset.
You can make very good money buying and selling gold. However, you need time to learn all the specifics. A competent and thoughtful approach to gold trading will provide the beginner trader with a stable profit and a steady increase in his own wealth.
