Gold has maintained its steep price rise in
recent weeks amidst speculations about the increasing debt crises from Greece
to United States contributing in making the metal as one of the safe haven
assets to purchase. According to a latest report published by the World Gold
council, the metal had outperformed all major commodity, bond and equity
indices across the globe in all three quarters of the 2013-14 and stands a
great chance to make it a clean sweep. While some investors are of the opinion
that this price rise is temporary, others reckon the price with rise even
further. Doug Mears’s Leland Gold predicts that the metal will touch $2500 an
ounce next year. But, how should potential investors get exposure? Read below 4
effective tips for trading gold:
Never buy too much: Gold is thought to be a
safe asset that will always retain a big part of its value even if every other
asset classes are depreciating in value. Therefore, people mostly hold gold as
insurance out of the belief that the world economy will combust. However, it’s
to be remembered that gold holdings provide zero income and gold price can also
be volatile, especially when equities are falling. That’s the only reason why
most of the leading providers of physical gold to the investors advices investors
not to invest more than 3%-5% in gold.
Consider Using Gold ETF: Gold ETF’s are a
simple way of gaining exposure to gold. The ETF securities offers listed
tracker funds backed by physical gold, contrary to the other major
exchange-marketed commodities, which mostly tend to follow futures contract.
Moreover, using Gold ETF’s, gold can be traded daily in return of a nominal
management fee that further makes it convenient for the traders.
Hold Physical Gold: The specialist gold
providers’ looks to purchase physical gold and accumulate the purchased gold in
nominee accounts or vaults- providing them the security of being assured that
the purchased gold is effectively held in their names. However, at times it
might well be difficult to sell physical gold quickly and adding to it, upfront
expenses can also be high. Therefore,
over purchasing is again something that traders should always be careful of.
Purchase Gold Miners: This is one of the
most widely preferred indirect ways of gaining exposure to golf. Studies and
surveys conducted over the past couple of years have clearly revealed that with
the share prices of the mining companies going down steeply amid volatility of
the equity market, gold miners are enjoying a much better trading prospect
compared to the consistent rise in the price of gold. At the same time, investors also need to
understand that shares in such mining companies have a risk of being adversely
affected by bulk selloff in equities- which is exactly what physical gold
protects the traders from.
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