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Insights on money, career and trading

The advantages of trading in gold and other precious metals

Posted on May 12, 2014 by Daniel at 1:53 am

Thank you, Simon Cunningham, for the awesome picture.

Gold and other precious metals have been a global trade for centuries, times have changed but they are still as lucrative as ever.

There is no need to buy physical gold coins or bullion, or even diamonds, the growth and development of trading, especially online, means you can make an investment that is right for you.

The rise and fall of gold, and other precious metal, prices means that, if you invest wisely, you can make trading pay for you. But it is important that you get some further information, for example, you should check out Rosland capital, who sell gold and silver, for their review.

Why trading in gold is such a great idea:

Gold is probably one of the most interesting assets you can trade-in, especially if you are relative newcomer or inexperienced investor. Due to the volatile nature of gold prices, it opens up a great opportunity to make some short-term gains if prices start to suddenly move in the right direction.

As gold fluctuates over short periods of times, it still retains a lot of its value as it is inflation proof. For this reason, it is seen as a wise investment choice for establishments such as banks in times where inflation is very high. Gold seems to retain and, in some cases, increase its value over more difficult economic conditions.

A long-term element of trading in gold is in the supply and demand chain. Gold is a natural resource, and it is therefore limited. Little supply and lots of demand, ensures again that gold retains and, over time, increases in value. All natural resources are the same, so the application of this supply and demand interaction will tend to indicate that prices will rise.

How to trade in gold effectively:

If you choose to trade in CFDs and binary options, you will not own the physical gold at any point. With this type of trading, you are only speculating on the prices upward or downward trajectory.

If you decide to trade in CFDs your gain will be the difference between the two prices of purchase and selling. Binary options work a little differently, as you will earn a fixed amount upon expiration of your options, as long as this earning is as anticipated.

There are a number of elements that help identify trends in gold trends, such as:

The value of the dollar: This is inversely correlated to the value of gold. So, this means that when the dollar price is rising, the price of gold is generally falling. This is because it becomes less affordable for investors in other currencies. However, if you are looking at rises in gold prices you need to look out for the falling value of the dollar.

Economic news: As gold is a global commodity, news from all regions can have a bearing on its value. For example, if there is negative investment or economic news coming from Europe, it will have an impact on gold prices.

If you choose to invest in gold and other precious metals, it is important that you consider all the risks, as well as the potential earnings.

This article has been provided by Roisin Byrne as part of her Business Boutique programme. You can find out more about the programme by clicking here.

You can find out more about the programme by clicking here.


Insights on money, career and trading