Traders today have a wide variety of instruments to maximize gold trading in Australia. The most obvious way to trade gold is by buying it in its physical form – that is, gold bars and coins. The problem with this however is the storage and costs during transactions, therefore making it a less convenient method.
According to the World Gold Council, the supply of gold from mine production in Australia recently experienced a marginal decline due to the lower grades of gold at older operations.
Now, if you are looking to get started in Australia gold trading, then three of the most popular options today are spot gold, gold futures and gold ETFS.
Spot gold
This is perhaps the simplest and most cost effective way to trade gold online. In spot gold trading, Aussie traders are not required to possess the physical gold. This means that they don’t need to deal with storage and transportation when trading spot gold.
If you have been trading currencies for a while, then spot gold trading won’t be an entirely new concept to you as it pretty much has the same method with currency trading. In spot gold trading, gold is paired with the US dollar wherein Forex, two currencies are paired together.
One thing you should take note however is that a great deal of people fail in spot gold trading mainly because of the improper use of leverage. Remember that while leverage can make substantial returns, it can also create huge losses if not managed the right way.
Gold Futures
The gold futures market is basically the market for gold at a certain date in the future. Gold futures trade on the Commodities Exchange (COMEX) in New York and is also a part of the Chicago Mercantile Exchange (CME) Group. These are primarily designed for quick speculation and hedging. And just like with spot gold trading, futures also make use of leverage.
Gold Exchange Traded Funds (ETFs)
Gold ETFs are traded on the New York Stock Exchange and the NASDAQ. A gold ETF like Gold Bullion Securities Australia works similarly to a mutual fund in that the fund itself purchases the gold and this precious metal is held in the premises of the investment company. Most ETFs require a minimum amount of investment as they are funds that hold the physical gold. The Gold ETFs that are available today include ETFS Gold Test (Ticker symbol SGOL), Powershares DB Gold Fund (ticker symbol DGL), SPDR Spider Gold Trust (ticker symbol GLD) and the iShares COMEX Gold Trust (Ticker symbol IAU). These ETFs can be purchased and sold through an Australian brokerage firm using market orders, limit orders and stop orders.
Many investors turn to gold ETFs as a means of diversifying their asset allocation. And as the Eurozone sovereign debt crisis and the weakening of the dollar continue, the year 2012 may provide different results for the precious metal and cause short gold ETFs to become more in demand.
About Me
About Me
