Gold trading Australia is considered as a profitable, low risk investment in the market due to the high appreciation of gold prices. A number of Forex traders and stock investors have not shifted to a more “tangible” trading as the concerns over the Euro zone sovereign debt crisis as well as the weakening of the dollar continues.
Gold is an ultimate asset during periods of economic crisis, inflation and currency debasement. During these times, it is a common practice among investors to transfer their wealth from paper assets such as bonds, stocks and currencies into stored assets like gold and silver.
The Characteristics of Gold
If you have been into Forex trading, then you’ll easily understand how Australia gold trading works. Basically, a gold trader buys when the price is low and sells when the price is high. Perhaps the major upside of gold over currencies is its volatility. Gold is a lot less volatile than most of the currency pairs traded in the Forex market, therefore gaining its reputation as a “safe haven” for investors around the world. And since it is more stable that currencies, it will relatively stabilize your investment.
Spot Gold Trading
The traditional method of investing in gold is to buy it in its physical form – that is, coins and bars. The problem however with this is the storage and transportation costs that a trader needs to consider in every transaction. While this kind of method still exists today, a majority of investors prefer to trade gold through online gold trading software provided by Forex brokers. In online trading, traders can hold as much quantity of gold they want without actually having to possess them physically.
Leverage
Another beauty in gold trading in Australia is that traders can take advantage of the leverage it offers. Leverage basically means the ability to control a certain number of trades with a relatively small capital. Using a leverage of 100:1 as an example means that it is possible to enter into a trade for up to 100 dollars for every dollar you have in your account.
While leverage can be enormous and beneficial, this can cause huge losses and even wipe out an entire trading account if not used properly. As a trader, it’s crucial that you understand both the benefits and the pitfalls of trading with leverage.
Conclusion:
Economic specialists predict that the value of gold will continue to increase over the course of the next few years. Precious metals in general have proven that they make a great alternative investment during times of economic crisis. Investing in gold now would be a wise move particularly before the economy fully recovers, as the prices of gold will peak when the demand for it decreased.
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