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Ways of investing in gold
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.
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...
Dow to Gold RatioThe Dow Jones gold ratio expresses the price of the DJIA as a multiple of the price of one ounce of gold. For example, if the DJIA is trading at 15,000 points and the price of gold is $1,300 per ounce, the Dow Jones gold ratio is 11.5, or 15,000...
1. Monetary policy/Fed speakPerhaps the biggest influence on gold prices is monetary policy, which is controlled by the Federal Reserve. Interest rates have a big influence on gold prices because of a factor known as "opportunity cost." Opportunity cost is the idea of...
Golden Bulls: Visualizing the Price of Gold from 1915-2020 Some people view gold as a relic, a thing of kings, pirates, and myth. It does not produce income, sits in vaults, and adorns the necks and wrists of the wealthy. But this too is just myth. In fact, as a...
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