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Gold Trading - A Profitable Investment Opportunity

By Edited Nov 13, 2013 0 1

Gold is the most popular of all the precious metals for investing for good reason. Investing one's money in gold is guaranteeing that it is not lost because of an economic, social, and political or currency crisis taking place because the gold trade has something tangible with which it can back an investment.

Stocks and bonds are easier to invest in than is a commodity like gold bullion because of the physical aspect to some forms of gold ownership it, but for many who invest in gold, the fact that it cannot be handled through mere paperwork is what they like best. Anyone who wants to invest in gold has a few options like buying physical gold such as coins or other commodities, purchasing Exchange Traded Funds, which replicate the gold's price or getting into the commodities market and trading gold futures and options.

Two major corporations handle the gold trade and these are Comex, located in New York and Tocom, located in Tokyo. These general-purpose commodity exchange companies are organizations that deal in many future exchange contracts.

For people who chose physical gold, there are two main ways in which it can be stored at a local bank. Allocated gold is stored physically in the bank for the investor. It does not become the property or the liability of that bank, but remains the property of the buyer and is merely being stored for protection. The downside of this is that since the gold does not become the property of the bank, if it is stolen it is a personal loss, and the bank is not liable. However, contrary to what is seen in movies, the theft of gold from a bank is a very rare occurrence.

Unallocated gold storage at a local bank means that the bank is going to be using that gold in order to profit. They are then made liable for it since they are using it and investing it. Of course, this also means that a person's particular gold commodity may not be physically kept there. People will often see aggressive marketing for unallocated gold as this method lets banks use it for profit.

There are different ways to buy gold as an investment. Purchasing it in the form of jewelry is popular because, not only is it easy to find, a person can enjoy using it themselves. Gold bullion and small bars are another option commonly chosen. These options are usually numismatic coins, with a collectible value, or bullion coins that typically reflect gold's current market value. Either option will provide a simple means of buying and selling gold.

Coins have the guarantee that comes with being endorsed by a government mint, as well. A downside to investing in gold coins is that one must watch for fakes. Occasionally even investing in gold bars have been drilled so the interior can be replaced with lead, while the covering retains the appearance of legitimacy. The big gold bars are great investments but rarely affordable by an average consumer. Other ways of investing are gold trading over the counter, purchasing mining shares, online as e-gold, or as gold futures investments.

The gold trade offers many ways for people to invest and it is also a great means of ensuring that something other than mere paper exists behind an investment. Investing in gold requires some research due to the vast range of opportunities available in gold investment, but it can pay off for the person willing to investigate this great investment opportunity.



Sep 22, 2014 10:33pm
But gold has no return. It doesn't produce anything. All it does is sit in an account somewhere and you're gambling with the idea that hopefully one day someone will pay more for it than the price you bought it at. In my opinion, stocks and bonds is the way to go. In the long-run, stocks and bonds have proven to be a much more viable option versus gold.
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