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5 Useful Guidelines for Trading in Gold

Trading / 13 Apr 2019

Gold is by some margin the most sought after of all the precious metals. Not only is it valuable by any standard, but it is aesthetically the most attractive decorative metal. People like to wear gold, just as many of the more wealthy like to store it and trade in it. And if trading in it appeals to you, here are five useful guidelines for making a success of it.

#1: Be Certain It Is Authentic

It is worth remembering that wherever there is value there is also fraud, and gold is no exception. The first rule of engagement is always to purchase your gold from a trustworthy source. If it has a bad reputation, stay well clear. According to NBC News fake gold and silver coins are presently “flooding” the market. Gold jewelry should always carry a hallmark, which defines not only the authenticity but also the purity of the item.

#2: Consider the Market

Many investors like to trade gold because, unlike currencies, its price is not usually determined by the policies and whims of governments. All the same the market does still fluctuate, and successful traders will always pay heed both to the current price and to where it is likely to be headed. But it is also sensible to consider fluctuations in gold prices alongside of the dollar, as if the latter is weak against other currencies it can artificially inflate the price of gold and give a misleading impression of its value.

#3: Find the Best Place to Buy

As when buying any commodity, always shop around. Try to work out where is the best place to buy gold at any given point time. For products of a particular type Dubai is usually popular, as are Thailand, Zurich and Hong Kong. If you are looking for something ornate and showy then the designer stores in all of these places sell some truly exquisite pieces.

#4: Don’t Use Credit

Buying gold as an investment with credit is fairly much an oxymoron. As your gold appreciates in value any profit that you might make is immediately negated by the extra that you will have to pay to the lender in interest charges in order to service your loan. Gold should always be purchased using savings, or if that is not possible sell something else first in order to free up some capital.

#5: Own Your Gold Physically Rather Than On Paper

For many years, until relatively recently, gold was used as actual money. But since 1971 when the dollar was taken off the gold standard paper money has no longer reflected the amount of gold actually held in reserve. At times on the commodity exchange markets up to 500 paper claims for gold can be held for every ounce of physical gold that is held. In the event of instability this could lead to claims being submitted at such a rate that they will no longer be able to be met from real gold stocks, rendering your claim effectively worthless.

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