Gold investments demystified

By: rupeetalk

One of the most profitable investments during these tough economic conditions across the world has been gold. There has been a sharp rise in the price of gold over the last one year, which has led to increasing investor interest in the yellow metal. Today, one of the most popular routes to invest in this precious metal has been the exchange traded fund (ETF). Using ETFs enables investors to get an exposure to gold in their portfolio. While looking at this route there are also some other details that have to be considered for the purpose of ensuring that all angles related to the investment are covered.

Gold ETF

There are several gold ETFs that have been launched by mutual funds in the country. These are mutual fund schemes that are listed on the stock exchanges and an investor can buy and sell the units in the scheme just like he/she trades a stock. The transactions in an ETF can be done at any time during the day when the stock exchange is open for business, and hence it provides an element of flexibility for the investor. The best part of the investment is that the investor does not have to wait till the end of the day for the value to be known and he/she can make use of the price change that takes place during the day to benefit from the changing situation.

Linked to Gold

The main theme of the entire investment is that the price of the ETF is linked to the price of gold. This means that when an investor is buying an ETF, he/she has a direct exposure to the price of gold. Whenever the investor feels that the price of gold is going to rise and he/she would like to benefit from the move then he/she can buy the gold ETF and then gain from the rise when it occurs. The other point is also that transacting in this route is cheap because the cost for the investor is just the brokerage fee that he/she will pay for the transaction. In addition, there is the management expense of the fund, but this is low and is directly adjusted in the net asset value, so the investor does not have to pay this separately.

Limitation

The benefit that is witnessed in the form of gold ETF also represents a sort of limitation for the investor. This is because the instrument is appropriate in order to gain from the rise in the value but at the same time this cannot help an investor profit in case there is going to be a fall in the value of gold.

There are times when the investor might also have a view that the price of gold may fall and in several cases he/she might be correct in such an assessment too. In such a situation, the investor would like to ensure that he/she gains from the knowledge of this expected price movement. If investors want to ensure that they make use of only the gold ETF then there is nothing that they can do in terms of gaining from such a view because in case of a price fall the gold ETF will also come down. Investors cannot sell such units without having them in their portfolios. This is different from the use of gold futures where these can be sold to gain from a fall in price.

However, investors can try and ensure that they do not end up losing when the price of gold actually falls. This can be done by selling off the existing gold ETF holding before the expected price reduction. In case the price actually falls as per the expectation then the investors can buy the units again and gain when the price rises in the future. However, it is not necessary that the prices have to rise after a certain fall and it can be quite some time before there is actually another rise in the price of the metal. In such a situation, this route is inadequate for the investor who would have no option but to turn to the futures market.

At the same time, even though there are liquidity features in the gold ETF, investors have to understand that there has to be significant price movements to justify regular trading in such units. In that sense, for a normal small investor the gold ETF is a medium- to long-term investment.

About the Author

Rupeetalk is the one stop solution for all personal finance products. We provide detailed analysis on all personal finance products in India.
For any information on personal finance product , visit
http://www.rupeetalk.com

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Gold Investing – “Times Are Changing”

By: Brooke Hayles

Do you remember your history lessons in school? Were you paying attention? You may recall lessons that discussed the weight of gold or the history of gold in the world. Gold has been used for purchasing, bartering and collecting throughout history. Gold has even been a hedge against inflation and helps to preserve and protect future earnings of Americans.

Today, we can purchase, trade or make a gold investment in a variety of ways. Gold comes generally in two forms, also called bullion, these forms are coins or bars made of gold. With trading, most investors trade in gold futures on the market. Gold Investments are often made in refining or mining companies.

If you take a look at history, you will begin to notice that gold was very helpful all through the changing times. It provided a safe avenue during times when the world’s economy was unstable. For major gold investors, gold can improve a portfolio and decrease the amount of risk.

There is a variety of avenues when it comes to gold investing. The options for invest are; gold coins, bars, statement accounts, accumulative plans, mine shares and mutual funds.

Possibly the most popular avenue of gold investment is in coins and bars. There are different sizes and weights available to invest in. Some of the weights include 1 gram, 1 kilobar and the international bar. But that’s not all.

An investment in gold bars is one way to produce cost efficient methods of investing in gold. This is because broker commissions are minimal for selling and purchasing gold bars. Gold coins are as popular among small and medium investors. The reason for this is that in the issuing country, gold coins are considered legal tender and guaranteed for their face value even through economic changes.
Some of the leading gold coins include:

*The American eagle- It is available in weights of 1/10, ¼, ½ and 1 troy ounce *Canadian Maple Leaf- It is available in weights of 1/10, ¼, ½ and 1 troy ounce *South African Kruggerand- It is available in weights of 1/10, ¼, ½, and 1 troy ounce *English Britannia- It is available in weights of 1/10, ¼, ½ and 1 troy ounce *Australian Kangaroo- It is available in weights of 1/20, 1/10, ¼, ½ and 1 troy ounce *Chinese Panda- It is available in weights of 1/20, 1/10, ¼, ½ and 1 troy ounce *Austrian Philharmonic- It is available in weights of 1/10, ¼ and 1 troy ounce *Mexican Centenario Family- It is available in the following; 2, 2.5, 5, 10, 20 and 50 pesos. *Mexican Onza- It is available in weights of, ¼, ½ and 1 troy ounce

As you see above, gold coins are a popular form of gold investing and good planning for the future. Gold will be a good investment through changing times because it will keep its value.

Summary:

Gold Investing has been the best form of investment throughout history. Today, gold can be purchased in two types of bullion. You can also invest in “gold statement accounts“, “accumulation plans”, “mining shares”, “options” and “mutual funds”.
Gold investing assures that your future is secure.

About the Author

Author: Brooke Hayles
Check Out More Helpful Information About Gold Investing For FREE!
Visit Gold Investing Vault now!

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What you Need to Know About Investing in Gold

By: Gary Giardina

People like the look of gold, and they’ll do what they can to get it. Even though it costs more now, people still want it. If you’re interested in investing in gold, do some research before you shell out the money for it.

Here’s some things you should know before you take that big, financial leap:

In addition to gold coins, there are different ways that you can you can invest. You can use metals, mutual funds, mining company stock, or futures, as additional ways to make investments with gold. You can also invest in gold using bars, if you wish.

You can get more information by going to a metal dealer. Or you can search online to find some reputable ones. If you are a first time investor, it might be better for you to visit a facility to speak with a dealer in person.

If you have a lot of questions, you should write them down. Find out how long the dealer has been established. If they’ve been there a while, chances are they are very knowledgeable about what they do.

You’ll want to educate yourself before you visit with a dealer. That way, you’ll have an idea of how investing in gold really works. You’ll also find out if what the dealer is telling you lines up with your research.

If you do decide to pursue this, you should also think about investing in gold stocks and funds. It’s been proven that gold funds are a reliable choice to invest in. However, when you’re dealing with stocks, you’re dealing with a single entity. That means the gold stocks are not diversified and your investment isn’t as reliable as gold funds.

When you’re trying to decide what you’re going to purchase, don’t be in a hurry to make a decision. Don’t buy the first thing you see because you may regret the purchase later. All gold pieces are not easy to sell if you want to get rid of them.

You can also purchase certificates as an alternate option. This for you, would solidify that you own a piece of gold.

When researching about gold, find out how much it would be worth if it was kept polished and free of nicks and scrapes? What about if it’s not so polished? More than likely, it won’t be as much as the former. The better you maintain your gold, the better price you can get for it.

Investing in gold futures is for those who can afford to take the risk. If you’re just starting out and don’t have the money to risk for it, then you should pass on this for now. With futures, you have to be certain that you can handle the volatility of this segment.

Futures is considered a financial risk because you have to constantly figure out whether the price of gold will go up or down. Sometimes you may hit it on the head, other times you may not. If you get involved in this, you will have to either buy or sell for a certain price. The dependence on how much the gold is worth during that time determines how much money you will make.

Investing in gold can be lucrative, but you have to know what you’re doing when you get involved in it.

About the Author

Gary Giardina
For additional information:
http://goldinvestingsite.com

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Futures Trading – A Beginners Guide To Trading Futures

By: Andrew Baxter

What is Futures Trading? Futures’ trading is a form of investment which involves speculating on the price of a commodity rising or falling.

What is a commodity? Most commodities you see and use every day of your life:

• the corn in your morning cereal which you have for breakfast,


• the lumber that makes your breakfast-table and chairs


• the gold on your watch and jewelry,


• the cotton that makes your clothes,


• the steel which makes your motor car and the crude oil which runs it and takes you to work,


• the wheat that makes the bread in your lunchtime sandwiches


• the beef and potatoes you eat for lunch,


• the currency you use to buy all these things…

… All these commodities (and dozens more) are traded between hundreds-of-thousands of investors, every day, all over the world. They are all trying to make a profit by buying a commodity at a low price and selling at a higher price.

Futures’ trading is mainly speculative investing, i.e. it is rare for the investors to actually hold the physical commodity.

If all this is a bit over your head, and you’re looking for a solid day trading strategy, I suggest you join me on one of my live webinars by clicking here.

What is a Futures Contract?
To the uninitiated, the term contract can be a misleading however the term is used because a futures investment has an expiration date. It is similar to other forms of short-term contract. You don’t have to hold the contract until it expires. You can cancel it anytime you like. In fact, many short-term traders only hold their contracts for a few hours – or even minutes!
The expiration dates vary between commodities, and you have to choose which contract fits your market objective.

For example, if today was June 30th and you think Gold will rise in price until mid-August. The Gold contracts available are February, April, June, August, October and December. As it is the end of June and this contract has already expired, you would probably choose the August or October Gold contract.

The nearby (to expiration) contracts are usually more liquid, i.e. there are more traders trading them. Therefore, prices are a true reflection of trading activity and less likely to jump from one extreme to the other. But if you thought the price of gold would rise until September, you would choose a back-month contract (October in this case).

Nor is there a limit on the number of contracts you can trade. Many larger traders/investment companies/banks, etc. may trade thousands of contracts at a time!

All futures contracts are standardised in that they all hold a specified amount and quality of a commodity. For example, a Pork Bellies futures contract (PB) holds 40,000lbs of pork bellies of a certain size; a Gold futures contract (GC) holds 100 troy ounces of 24 carat gold; and a Crude Oil futures contract holds 1000 barrels of crude oil of a certain quality.

A Short History of Futures Trading
Before Futures Trading, a producer of a commodity (e.g. a farmer growing wheat or corn) could find himself at the mercy of a dealer when it came to selling his product. The business of transacting between producer, agent and end-use needed to be legalised so that specified amounts and quality of product could be traded between producers and dealers within a specified time-frame.

Contracts were drawn up between the two parties specifying a certain amount and quality of a commodity that would be delivered in a particular month…

…Futures trading had begun!

In 1878, a central dealing facility was opened in Chicago, USA where farmers and dealers could deal in ‘spot’ grain, i.e., immediately deliver their wheat crop for a cash settlement. Futures trading evolved as farmers and dealers committed to buying and selling at a specified time in the future. For example, a dealer would agree to buy 5,000 bushels of a specified quality of wheat from the farmer in June the following year, for a specified price. The farmer knew how much he would be paid in advance, and the dealer knew his costs.

Not too long ago futures markets consisted of only a few farm products, but now they have been joined by a huge number of tradable ‘commodities’. As well as metals like gold, silver and platinum; livestock like pork bellies and cattle; energies like crude oil and natural gas; foodstuffs like coffee and orange juice; and industrials like lumber and cotton, modern futures markets include a wide range of interest-rate instruments, currencies, stocks and other indices such as the Dow Jones, NASDAQ and S&P 500.

Who Trades Futures?
It didn’t take long for businessmen to realise the lucrative investment opportunities available in these markets. They didn’t have to buy or sell the ACTUAL commodity (wheat or corn, etc.), in order to trade the price movement of a commodity. As long as they exited the contract before the delivery date, the investment would be a simple trade. This was the start of speculation in the futures markets, and today, around 97% of futures trading are speculative by nature.

About the Author

Andrew Baxter is one of Australia’s most highly regarded trading and investment educators. Andrew is also a co-founder and facilitator of the Elite Traders Group, Options Trading Mastery and various other educational programs aimed at leveling the playing field between professional and private traders.
For More Information About Andrew’s Free Educational Webinars and Resources, please visit the Elite Traders Group Website: http://www.EliteTradersWebinars.com.au

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