The price of gold has fluctuated dramatically in recent years, with a notable downturn during the recession. Gold futures contracts have been affected by this price movement in a number of ways, including price speculation and the hedging process. When buying or selling futures contracts, it’s important to take into account a number of tips and trends. Some of these tips include:
Tips to buy Gold and earn profit
Tip one is to buy gold as the price of gold bars increases. When looking at the price of gold in the physical form, a common mistake is to assume that the price of an ounce of gold is always the same. This assumption is proven wrong when a number of factors are considered. For example, an ounce of gold can be more expensive depending on where it’s located. One example is London, which is known to have higher fees when purchasing gold in this location. As such, it’s more effective to buy gold in bullion or smaller amounts as a hedge.
Tip two is to wait for the market price to break through a particular level before selling. When a bullion or smaller quantity of gold is sold, this implies that much gold will soon be available for sale on the open market. As such, the price of gold should be able to sustain a drop. Waiting too long could see all the gold buyers rushing to purchase and driving up the price of all products. The result could be higher charges when selling on the open market.
Tip three is to consider selling gold held in the custody of a financial institution. Gold held within a trust account is less liquid than bullion. This means that holding onto gold within an investment vehicle may be a longer term option. Gold prices usually increase more slowly than the benchmark interest rates. However, even if gold held within a trust account does not increase as much as the benchmark interest rate, over the course of ten years the marginal returns could be substantial.
Thirdly, gold investors are advised to keep track of local, regional and international news relating to gold investments. Spot prices are easy to determine from charts but determining future prices can be complex and requires extensive research. Therefore, gold investors need to keep current on any global news that affects the metal’s status in the market. Many newspapers and financial publications provide live gold bullion coins. Investors can also keep current on commodity markets and other financial news throughout the day through financial spreadsheets and other tools.
Tips four and five deal with diversification. Gold cannot be purchased or sold on one transaction alone. Since gold prices tend to vary significantly from day to day, it is often best to diversify your gold holding. Investing in different forms of holding, such as stocks and bonds, can also protect you against sudden loss of cash in case the market suddenly fluctuates out of your favor. Furthermore, by diversifying, you can also protect your wealth from market whims.
Price six involves using online gold buyers. The Internet has made it much easier for investors to buy and sell physical assets without going outside of their house. Online gold buyers often offer the lowest premiums on the gold they purchase since physical asset transfer costs are avoided. Although online gold buyers usually have the lowest premiums, they may not offer the best service. The best online option for investors is to use an established company like GIA that is trusted for delivering high-quality buying and selling services. If you decide to use a site not affiliated with a company, it would be in your best interest to verify its credentials to make sure that you are dealing with a legitimate and authorized representative.