Investing In Gold: The facts and figures

The global financial market presents a potential opportunity for investors, traders, and enthusiasts for earning. Two investment schemes known to mankind that could generate potential profits are real estate and gold investing. While real estate requires huge capital to get started with, the case is different when you want to invest in gold or precious metal.

If you are ready to dive into the world of gold investment, this article is specifically curated with you in mind. In this article, we will talk about trading gold CFDs, advantages and disadvantages of trading gold CFDs, market price and the process of buying gold CFDs.

Trading gold CFDs is one of the routes to invest in gold and make legitimate interest. CFD, or contract for difference, is a trading strategy or tool that gives traders or investors the potential opportunity to speculate on the gold price differential in order to make potential profits or end up losing. Being a popular form of derivative trading, gold CFDs enable you to trade gold futures and make potential profit from your investment without directly owning the gold itself. As a CFD trader, you can also participate in other financial gold markets like commodities, shares, cryptocurrencies, foreign exchange, as well as precious metal.

In other words, trading gold futures or CFDs has to do with speculating the gold price on the spot. In this changing market, as far as a CFD trader is concerned, he or she has the option to either go long or short depending on the market direction at the material time. The potential profit earned from this investment is the difference between the selling and buying gold prices at the end of the contract.

Let's now walk you through financial markets and how gold CFD trading works

Contracts for differences are usually traded on a margin. On the market, a CFD trader is required to have a minimum level of margin in order to participate in a CFD trade. In essence, what we mean is that the amount you used to fund your account should not fall below this minimum level. If you deposit an amount lower than your margin level there will be a margin call. It is either you cover the gap or your trading position will be liquidated.

Generally, the rate given to margin usually ranges from 0.5% to 30%. This enables an average trader to take advantage of leverage to make more profit or take a loss if the market goes south. This is exactly why CFD trading is considered a high risk investment. If you are trading gold CFD, remember that using leverage to trade can magnify your potential profit and can also magnify your possible losses if things don't work out well. 

Gold CFDs trading come with so many advantages which we'll take a look at in this section. First and foremost, as a good CFD trader you will be exempted from paying what is known as stamp duty; plus, it is not a must to deposit the full value of your trade, unlike a trader who is involved in the physical trade of gold.

Another possible benefit of CFD trading is that you can hold the investment for as long as you wish, since it doesn't have an expiration date. The trader decides when to close his or her trading position using the prevailing market conditions as an albatross.

During unstable and economic uncertainty, gold options are one of the means that investors could leverage to enjoy investment stability. As a matter of fact, an investment in gold is considered the world over as a solid investment.

While this may sound too good to be true, it can also spell doom if the market goes the opposite direction from your trading strategy. You will be exposed to a high risk which may cause you to lose your trading capital to market forces.

Lastly, any cost you incur as a result of trading gold CFD is usually very minimal; this alone can help to shore up your annual savings. However, the cost of gold CFD trading largely depends on the broker you are trading with and your location. The fact that you're trading gold CFD will put more money in your pocket since you're paying less fees.

As with any investment or investment scheme, trading gold CFDs have its own inherent disadvantages. Let's take a look at some of them:

Since gold CFDs are usually traded on a margin, if the market goes the opposite direction from your trading strategy, the margin will magnify your risks which may cost you your trading capital.

1. The risk of Premature Liquidation in the market

On the gold CFD market, there are usually unfavorable gold price movements. Sometimes this movement represents high volatility if you invest in the market. But if you have a variation margin, it will let you maintain your required margin level so that you don't go against the rule.

Some brokers may even require you to deposit more money into your trading account within a short period of notice. Failure to do that means that the CFD provider will close your position and you will stand at a loss.

2. The Counterparty Risk

The counterparty risk is not too common. But, if it occurs, you may lose your trading position. And if you don't meet the financial obligation to your CFD broker, you may also lose your trading position, and by extension your trading capital.

Retail investors can trade gold CFDs on a reliable and reputable dealer or online broker. However, before you dive into the trading journey, it is important to review the performance and track record of the broker you will be dealing with. For instance, you need to review aspects like the broker's ease of deposit or withdrawal of earnings, the regulation status of the broker, the fees charged for transactions, as well as the efficiency of their customer service team and personnel.

While there are a lot of CFD brokers on the internet, one broker that is outstanding and has proven to offer value for money, as far as the South African financial market is concerned, is InvestGlo broker.

Buying and selling gold CFDs on our trading platform is straightforward. While there is no trade or investment that does not come with inherent risks, we have stepped up our game by providing a conducive and transparent trading environment for all Traders in real-time.

Whether you are a retail investor with a huge budget or a beginner investor with as little as $50, you can start trading on gold CFDs on our platform. Since you do not directly own physical gold, we allow you to invest in the rising and falling of the value or price of physical gold.

1. Regulation

In South Africa, financial regulators do not let their guard down. InvestGlo has met all the regulatory requirements and has been declared a regulated broker by the financial watch dogs in South Africa.

2. Maximum Security

As long as you remain on our trading platform, your trading funds or investment is safe with us. To stay on top of our game, we use segregated accounts to hold traders' funds; thereby offering maximum protection to investors' portfolios.

3. Protection Against Negative Balance

We understand the inherent risks on the physical gold market; as such, we have measures on the ground to protect investors from negative balance. These measures give traders and investors full control over any risks that may pop up as you trade gold CFDs.

Buying physical gold CFDs on our platform just got easier. All you need to do is to follow these three steps below, and you are good to go:

Step 1: Open a trading account. You need to launch our official website and then navigate to the area where you will see the account opening button. Click on the button and complete the account opening form. Upload all the required documents for the know-your-customer protocols, and then submit your account opening form for verification.

Step 2: Once your live trading account is up and running, the next step is to deposit funds that you will use to purchase the gold CFDs. We support a wide range of payment methods, so look for the payment method that is most convenient to you and deposit funds from your bank to your trading account.

Step 3: The moment your trading account has been credited, you can start trading gold CFDs. On our trading platform, you can open a long or a short position in order to make a profit. Once you open a position, you can keep track or monitor the progress or performance of your trade position to take a profit. Remember to Leverage trading tools to help mitigate the inherent risks on the market.

The truth is that it is practically impossible for you to sit all day in front of your laptop monitoring all your open positions; as such, you need these tools to serve as your second eyes on the market.

Gold investment, whether gold CFDs, gold futures contracts, or purchasing of physical and gold bars, deciding on any of these investment requires deep thinking. Gold investment could be a complicated decision, especially if you are a beginner investor. However, if you have decided to proceed with gold investment, it is critical to buy from a reputable online broker.

If you are investing in gold for the purpose of your retirement, it is also critical and important to purchase from a credible broker, and then look for a custodian to hold the gold for you securely. According to financial experts, the total value of gold you should buy should not be more than 10% of your overall Investment Portfolio. This is to avoid market risks and other risks inherent in the market.

For instance, if you suffer a loss in the stock market, the value of your gold could surge or even repeat historical trends as we have seen in the past. Thus, preventing you from losing everything all at once. But remember that this is not even a guaranteed approach; therefore, as you look to dip your feet into the market, you need to tread with caution so as not to lose your investing capital.

Another important consideration at this point is to use a demo account to trade gold before upgrading to a live account. This will help you to better understand the nitty-gritty of the market and also understand the factors that control the price of gold industry. Thankfully, here on our trading platform, we have a user-friendly demo account that you can get started with. Our demo account is unlimited; meaning that you can practice for as long as you want without paying a penny. Then when you are comfortable trading gold using our demo account, you can upgrade to a live account so that you can start making real profit.

Investment in gold is considered by the majority of gold investors across the world as a good idea; simply because you can use gold to save your money from devaluation. Gold prices for a very long time have continued to remain high despite the global financial crisis, including the recent pandemic that ravaged the world.

With so many options to purchase or buy physical metal (gold) and included into your Investment Portfolio, the best way to invest in gold is to buy physical coins or physical gold bars. But you must make sure that you store them securely.

Gold CFD or gold mining stocks are another important method of purchasing gold, likewise exchange-traded funds (ETFs) and mutual funds. Exchange-traded funds is a more popular option though.

Gold ETFs track and monitor gold prices on different brokers or exchanges. Conversely, if you have access from your brokerage account to the directive market, you can also invest in gold through options trading and gold futures, but first determine your investment objectives and apply market research.

While there is no perfect amount to buy gold jewelry for it to be declared a good investment, your best bet is to buy and hold gold, and the value of gold you intend to buy should not be more than 10% of your overall account value.

In time-pass, the value of gold had moved in the opposite direction to the United States dollar, which is one of the reasons why many Americans prefer to use gold as a hedge against inflation.