Gold has arguably been the most valuable commodity for the longest time. It is a symbol of power and wealth, and it has been used as money for thousands of years. Throughout history, gold has maintained its value, which makes it a great investment in times of economic uncertainty. The fact gold rarely loses its value has been proven numerous times and you can see this for yourself. Next time there is a major global economic event you can track metrics like gold price in Bikaner or Ahmedabad and you will find that the price never falls. Visit this page for more info.
Yet, the price of gold can vary greatly over time, which is why many investors turn to commodity trading to make money from changes in the price. This page will look at how to build a commodity trading strategy, with a focus on gold.
- Understand the different types of investors and their goals
Gold bugs are the people who are bullish on gold, they believe that gold will always retain its value and will not tarnish with time. Gold bugs invest in gold because of their beliefs and expectations. They have been criticized in the past for not using any mathematical or statistical methods while making their investments, but they are still a major part of the gold market.
Institutional investors are the ones who invest in gold as a hedge against inflation. They invest a small percentage of their net worth in gold, usually 1%. These institutional investors include banks, pension funds and insurance companies.
- Learn about the things that affect gold prices
Make a list of all the things that affect the price of gold. Don’t worry if it’s not complete; just get as many as you can think of.
Now make a list of all the things that move the price of an individual stock. Here again, don’t worry about whether it’s complete. Compare the two lists. Do you see any differences?
The first list is much shorter than the second one. A stock’s value depends on a whole bunch of different things: its earnings and dividends, its prospects, who owns it, what they think they can sell it for, who wants to buy it, and so on. Gold has just one kind of fundamental value: industrial use. But that’s not what makes its price go up or down most years. What drives gold prices are changes in the supply and demand for speculators. If you learn about the entire supply chain of gold you can easily relate it with the change in value of things like today gold rate Chittoor or for any other place. This will undoubtedly give you a better insight as an investor.
- Learn to read charts
If you want to be an expert at trading gold, you need to learn how to read these charts to know where the trend is headed. This will give you an idea of what kind of moves you should be making when it comes time to sell or buy gold.
Make up your mind about how you want to invest in gold
There are many ways to invest in gold, each having its advantages and disadvantages. Some of the most common are:
- Futures – These are contracts for gold that can be bought or sold on a commodities exchange. The contract specifies the amount of gold and when it should be delivered. This allows investors to make money without actually owning any physical gold. However, it is important to remember that a futures contract is only a promise to buy; if you choose not to take delivery, the position must be closed (sold) before the delivery date or money will have to be paid equal to the difference between the settlement price and the delivery price.
- Equity markets – Gold miners and other companies involved in extracting, refining or marketing precious metals can be bought on a stock exchange, allowing direct investment in gold without purchasing any physical metal. These companies do not always perform as well as one might expect when prices are rising because of their high operating costs.
• Gold trust shares – Specific trusts that invest in bullion or mining stocks, enabling investors to buy into these securities without taking physical delivery of any gold. These are traded on stock exchanges like normal shares and provide an easy way into trading precious metals.