There are many reasons why you might want to invest in gold: as a hedge against inflation, currency risks or simply to diversify your portfolio. Invest in gold without commission with each of these brokers.
We discuss 4 proven strategies to help you invest in gold, and consider their pros and cons:
If you're new to investing in gold, you're probably familiar with the gold bars (or ingots) held in vaults by central banks. These gold bricks weigh a standard 400 oz (troy-ounce) or 12.4 kg. However, gold bars come in many different sizes and shapes, from just 1 gram to 1 kilogram.
You could also purchase gold coins. Examples include the American Golden Eagle, the Australian Gold Nugget, the British Sovereign, the Canadian Maple Leaf and the South African Krugerrand. Some of these coins, called numismatic coins, are more expensive than other because they have rarity value as collectibles.
Together, gold bars and coins are known as bullions. You can purchase them online from a number of reputable websites. You'll also need to decide whether to keep your gold at home, or store it securely in a bank's safety deposit box for example. You should also consider specialised insurance to protect your investment from loss or theft.
If you only want to profit from changes in the price of gold, without having to worry about storage or insurance, you could invest in Gold CFDs (contracts for difference) instead with AvaTrade or Plus500.
If you expect gold to rise above its current price of US$ 1,000 per ounce (fictional price, for illustration), you could invest US$ 10,000 to buy 10 CFDs. If the price of gold were to rise by $100, you could net a US$ 1,000 profit (excluding any charges your broker may levy).
CFDs are popular with investors like you because they allow you to significantly increase your profit through gearing, also known as leverage. CFDs brokers only require that you invest an initial margin, which can be as low as 1% of the trade's size, because they will lend you the difference. If your initial margin is 1% and you were to invest US$ 10,000, you could buy 1,000 CFDs (instead of 10, without leverage). A $100 rise in the price of gold could deliver a US$ 100,000 profit.
In practice, leverage is a double-edged sword that can increase your gains and losses. If prices move against you, your broker may ask you to make further deposits or close your position altogether. This is why gold CFD brokers that provide negative balance protection are popular with investors.
You could also speculate on the price of gold without taking physical delivery through Exchange Traded Commodities (ETCs). ETCs can track the performance of a single commodity or a commodity index. Gold and precious metal ETCs are often backed by the physical commodity itself, held with a custodian. Because ETCs are listed on exchanges, you can buy and sell them in the same way you invest in shares.
ETFS Physical Gold (PHAU) is a Sharia-compliant ETC that tracks movements in the spot price of gold, less a management fee and any charges your broker may levy. It is backed by physical gold held with HSBC Bank, the custodian. Only metal that meets the London Bullion Market Association's (LBMA) rules for Good Delivery can be accepted by the custodian. Each physical bar is segregated, individually identified and allocated.
Last but not least, you could trade the shares of gold mining companies to get exposure to the price of gold. However, this would not give you as clean a read on the price of gold, as stock prices are driven by many factors above and beyond the price of gold. You should carefully assess the companies you plan to invest in on their own merits. A company's management team, the strength of its balance sheet and operations are some of the factors to consider.
Gold prices retreated following the news that President Donald Trump's chief strategist Steve Bannon has left his position, after earlier Friday hitting their highest level since the U.S. presidential election. Gold for December delivery closed down 0 ... More »
Gold prices touched their highest intraday level of the year on Friday, briefly topping $1,300 an ounce before pulling back to settle lower for the session. "The selloff is unusual as there was no data or market news to account for the [roughly] $15 ... More »
In spite of this, I reverse my view that we could see gold trade at 2016 levels again. Equity markets in the United States continue to rise buoyantly, indicating that risk appetite is not low enough to justify further price rises in gold. Moreover ... More »
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Trading foreign exchange, contracts for differences or spread bets on margin carries a high level of risk and may not be suitable for all investors. You could sustain a loss of some or all of your funds if the markets move against you. For this reason, you should not invest more than you could afford to lose. ForexBrokersAZ.com does not accept deposits, advise on investments, deal in investments (as agent or principal) or arrange deals in investments. Information published on this website and in our external communications is factual and for information purposes only. It does not constitute financial advice under the Financial Services and Markets Act 2000. ForexBrokersAZ.com is owned by Hades Capital Limited, a company registered in England under number 08176698.