How Can I Invest in Gold?
Basically, various methods exist to invest in the gold market. One way to make an investment in gold is to order physical gold from a bullion dealer. Many companies specialize in selling gold bullion in bars and coins in a variety of different denominations.
Another alternative would be to open an online trading account with a forex broker who offers the capability to buy and sell spot gold.
Practically all online forex brokers allow their customers to either trade on a proprietary trading platform, or have their clients use a third party trading platform to execute trades. One advantage in using an online forex broker is that they offer clients considerable leverage in their trading.
Nevertheless, each broker has different account types, minimum deposits and leverage and margin levels. Unfortunately, recent U.S. legislation (Dodd-Frank Act) prohibits U.S. residents from leveraged trading of gold in an online forex account, although some online brokers offer unleveraged trading in precious metals for U.S. residents.
Another way to invest in gold would be to open a futures account with a commodities futures broker and invest by buying gold futures or gold Exchange Traded Funds (ETFs), however, this would most likely require a larger initial cash deposit than an online broker, with minimum deposit and maintenance requirements, nevertheless, gold futures make up the only way United States residents can trade leveraged gold positions.
Investing in gold can also be achieved by purchasing shares of gold mining companies. Most gold mining company stocks closely follow the price movements of the yellow metal, offering investors a less risky alternative than buying futures.
By InvestorGuide Staff