How To Earn Money In The Gold Trade Market
History shows that people value gold as a basic commodity. Economies may turn bad, governments may fall, and paper money fail to maintain their value because of the inflation rate, but the value of this precious metal cannot be undermined. This is seen in how reigns considered as the richest in history are the ones who have accumulated huge volumes of this metal over the years. If you want to earn money in the gold trade market, here are some things you need to know.
The value of this precious metal is stable globally, unlike equities, bonds, and the stock market. The rate of its production and the existing economy doesn’t affect its final worth. Its value, instead, depends on its current demand, particularly since it is used in different items and materials.
Like paper money, you can enter the gold trade market through bullion, futures, mutual funds, jewelry, and mining companies. However, unless you have a company that produces similar products, it may be sufficient to get involved in futures, mutual funds, and bullion.
Bullion is the most common form of personally owning this precious metal. It refers to any pure or almost pure form that’s been certified in terms of weight and purity. It can be as small as a coin or as huge as a bar or brick. Owning heavy bars are certainly impressive, but you can’t really trade off just a portion of this. If you’re after trading and not collecting, smaller bars and coins would be better.
The most convenient form of investment is coins since they’re more popularly traded, and comes in various weights and sizes. Finding reliable dealers is easy because it is a global commodity. However, you may encounter pieces considered as rare. These cost more when traded, but their rarity makes them hard to dispose of, so new investors are urged to stick to dealing in popularly circulated coins instead.
You’ll also find ETFs or exchange traded funds that deal mainly with this metal. Like normal UITF or unit investment trust funds, you purchase only small sections in each piece. These can be easily traded to others, or sold in brokerage or IRA accounts, just like stocks. Also, the size of shares makes it easy for low-budget players to trade. The minimum required amount is low, but other fees and expenses that you see in regular options also apply.
Like ETFs, mutual funds offer investment in privately owned mining companies and bullion in their portfolio. If the company focuses in gold investing only, you have the opportunity of diversification without thinking too much about it. Mutual funds usually employ experienced fund managers, removing the need to research each company. If you’d like to double check the reported returns, just compare financial reports with the latest news about the listed companies they invest in.
Another option to get into the gold trade market is to invest in futures. Instead of shares, you trade contracts, where you specify a date to buy or sell a specific amount. This is a lucrative option because commissions paid are low, but they may not be for new investors because you’ll have to wait out until the maturity of the contract, and you have to take note of fluctuations in the market to know if you’ll redeem the contract or roll it over once it expires.
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