Aromatherapy Jewelry

Posts Tagged ‘gold future trading’

Investing in gold futures does not require gold to exchange hands. A gold future refers to an agreement by the buyer to buy a certain quantity of gold at a pre-set price at a future time. Gold futures are the best way to gain leveraged exposure but are unpredictable. Gold futures are a fascinating and important territory, but they do not deserve the level of mysticism and dread they seem to generate. The futures priesthood that ‘informs’ gold-stock traders often takes events out of context and disseminates half truths planned to sway sentiment.

Gold’s significance in world markets make COMEX Division gold futures and options an important risk management tool for commercial traders. Operators watch Comex contracts as an indicator of froth in the market. Trading gold futures securities happens mainly on paper: most of the gold bought or sold in the futures market never moves. Gold futures are typically traded by “speculators,” investors who buy or sell gold futures but aren’t interested in the physical gold, versus “hedgers,” who do value the gold itself as an asset. Trading gold futures also has low commissions.

Gold options are also powerful and cost-effective investing instruments, that can be used to own desired quantity of gold in future, and can also be used to hedge price changes of gold that you hold. Each futures contract is for 100 troy ounces.

Prices in an organized derivatives market mirror the perception of market participants concerning the future and lead the prices of underlying to the supposed future level. The prices of derivatives join with prices of the underlying at the expiration of the derivative contract. Prices swing based on supply and demand (although the twice-daily gold fix in London aids set a reference point for prices). The price of gold in the spot gold market-called the “spot price”-is the price fixed for the spot gold, including delivery, to be paid two days following the date of the actual transaction.

In closing, let me emphasize again that gold futures are not a risk free financial commodity and should be considered judiciously. Investments should only be made with risk assets which is money you could afford to lose and it would not cause you to change your standard of living in any manner.

If you have been hit hard by the financial crisis, you should learn how to sell your gold to get some extra cash fast. My site has a number of tips on where to sell gold