How to buy gold on the stock market?
Gold has always been a safe and popular investment asset with numerous individual traders. But how is it possible to buy gold on the stock markets nowadays?
This is the subject we shall examine in this detailed article with explanations and information on the advantages of the various existing methods.
The advantages of gold on the stock market and its growth prospects:
Let us first examine the advantages of gold as a stock market asset. As with most commodities, gold has the particularity of being highly volatile. It is therefore an ideal asset for short or medium term trading strategies, or for traders that do not possess a substantial investment capital.
Also, gold has been recognised for a long time as a safe refuge value. This means that it has a tendency to main a high price level, even if other markets fall. In fact, investment companies tend to invest massively in gold when their other positions become a little risky. This reputation is due to the fact that gold is an exhaustible resource and the demand has been rising over the last few years. It is therefore difficult to envisage a serious prolonged fall in the price.
Why gold is a safe investment
Despite the uncertainties that currently affect the gold market, investors seem to still be faithful to the famous yellow metal. Here we will attempt to understand why gold is considered as a safe investment ‘par excellence’ and what are its’ advantages that keep the investors loyal.
Analysis of gold price
Last week, gold reached a new price record exceeding $1,260 per ounce. But this phenomenon was brief because this week, the yellow metal has gone down to $1,200. But experts are categorical; this fall is actually a simple technical correction that was expected, in fact due, in accordance with numerous records reached over the previous weeks. Remember that gold has risen around $400 over the past two years.
This fast rise in the price of gold is a well-known phenomenon as are the consequences. In effect, this quick rise in price has a long term tendency to scare the investors. It is normal to observe certain price corrections. According to specialists, there is no worry about the future of gold prices, although the trend will appreciably slow down the growth rate.
Why gold is considered a safe investment ?
Gold is therefore well considered as a solid and safe resort by investors. In this atmosphere ruled by the European crisis, traders wrestle to recover confidence in a possible economical growth. The markets with a high volatility contribute to nourishing this feeling of doubt, and the current economies as well as the publication of different technical indicators do not reassure investors.
This particular situation drives investors to turn to safe investment like gold. Indeed, the fear of high inflation, already mentioned by some central banks does not encourage traders to invest in uncertain currencies, but to seek safety elsewhere.
It is in gold that this search is expressed since, despite the EUR/USD stabilisation, traders continue buying gold. Even worse, they do not seem to be decided on removing their profits, although gold has recently lost some important points.
The explanation for this finding is that traders are now considering gold as a long term investment and have an inalienable trust in the upward trend experienced by gold for several years. More than just an investment, gold has become a way of saving that seduces more and more individuals who require medium or long term profitability.
The reasons for the rise in the price of gold
For two years now, the price of gold has reached very impressive heights, even up to double the price per ounce. But, where does this phenomenon come from?
The answer is to be found from various sources. Firstly, it is important to remember that the price of gold is closely linked to the American dollar. In fact, as gold purchases are made principally in dollars, so the lower the dollar, the cheaper gold becomes.
But among the causes of this rise, one also finds the rise in energy prices like oil, itself linked to the value of the dollar. However, since 2008, the Fed, the organization responsible for the American monetary policy, applies a low rate policy which makes the dollar less powerful against the other currencies; this contributes to increased inflation and therefore encourages gold purchases by the investors. As the gold market is subject to the rule of supply and demand, its price logically increases as the purchases multiply.
Therefore, investing in gold is currently one of the best ways to make trading profits online.
The advantages of gold on paper as compared with physical gold:
Gold on paper is represented by gold mining securities, investment funds in gold values or certificates. Contrary to physical gold, paper gold offers numerous advantages for investors including major ones as follows:
- Gold on paper does not require storage, therefore no safety deposit box or storage fees which represents a real saving and ensures maximum security.
- Gold on paper can also be rapidly profitable as it enables you to achieve major plus values without having to search for a physical buyer, this is due to speculation and the leverage effects available through the online brokers.
Gold on paper can now be traded online using specific trading platforms that offer advantages such as a leverage effect, as well as the possibility of making profits even when the rate falls, by taking position on the purchase.
Why buy gold on paper now?
Let us look at the reasons for buying gold on paper now. As can be observed there has been a renewed interest by investors in this valuable commodity since the end of 2015. In fact, after a strong drop over previous years, gold is again attracting traders and much of this interest is due to the recession that is affecting the other financial markets, particularly the stock markets.
Gold on paper is therefore again considered as a refuge value. It was mainly bought towards the end of 2015 to cover risky positions, but still interests speculators who envisage a strong rise in the rate over the coming years.
The advantages of trading in gold
No need to buy coins or gold bullion to speculate on the rising price of the precious yellow metal while making low-risk investments. Indeed, thanks to the development of online trading platforms, it is now possible for everyone to trade in gold, even for individuals. To do this, you can use derivative products such as CFDs and binary options, which allow speculating on the upside and downside of the price of gold. Nevertheless, there are many other benefits to trading in gold. Here is a summary of the advantages of this investment method.
Why is trading in gold a compelling opportunity?
If you are a novice or inexperienced investor, gold is probably one of the most interesting assets you can trade in, and that, due to several factors. The first advantage of gold is its extremely high volatility compared to other market assets. This means that gold prices often suffer sudden and ample movements and thus allow for substantial short-term profits.
This volatility is even more interesting if we consider that CFDs offered by Forex brokers provide an additional leverage to increase your earnings.
Although gold is no longer really considered a safe haven, it remains an investment of choice for institutions such as banks, particularly in times of high inflation. This is so because gold is not sensitive to this factor, and retains its value while currencies lose theirs.
Finally, we should note that gold is extremely reactive to supply and demand interaction. Therefore, it seems appropriate to trade this value in the longer term, because we know that production is nearing its limits while demand is increasing due to its use by the industry, including the booming Chinese industry.
Buying gold on the Stock Markets using CFDs:
Let us now look at a far more profitable method of buying gold on the Stock Markets. This is by using CFDs, or ‘Contracts for the Difference’, which are available through Forex brokers online. On these brokers’ platforms, numerous assets including commodities such as gold are easily accessible and you may, using CFDs, take position on the rise, and on the fall, on the latter.
Also, CFDs offer the advantage of offering the use of a leverage effect which enables you to multiply the amount of your investment by 100 or 200.
To avoid unnecessary expenses, the ideal way is therefore to trade in gold yourself from your computer. In fact, most of the online brokers offer their clients the opportunity to invest only in the gold market if they wish. To do this, you simply have to subscribe to a CFD type trading platform and start trading.
On our website you will find precious advice on learning how to trade online together with trading strategies which will maximise your chances for success.
How to trade in gold effectively with CFDs?
Whether you decide to trade in gold with contracts on the difference, CFDs, you will not own the physical gold at any point. Indeed, online gold trading simply means speculating on its price upward or downward trend.
With CFDs, your gain will be the difference between the purchase price and the selling price of your gold lot.
To accurately identify the gold trend directions, you just need to follow a few key indicators such as:
- The value of the dollar is inversely correlated to the value of gold. This means that when the dollar rises, gold tends to fall as it becomes less affordable for investors in other currencies. Conversely, as the dollar falls, gold tends to appreciate.
- Economic news must be monitored as well. For some time now, we have seen the negative effects of the European crisis on gold prices. Conversely, as good news hit the European market, investors tend to buy gold again.
- Finally, global economic growth has a positive impact on the price of gold as the more industry develops, the higher its demand for precious metals. In particular, we should follow emerging areas such as Asia and countries like China, by itself a large consumer of gold.
The online gold trading platforms:
For the last few years we have seen a strong increase in the number of online trading platforms, or brokers. The aim of these platforms is to enable everyone, whether individual or professional, to speculate on different assets such as currencies, shares or even commodities which constitute in fact the most popular assets for trading.
By subscribing to one of these platforms you can in fact make a monetary deposit and use this capital to speculate on the rise, or even the fall, of the gold rate in order to make rapid and attractive profits. If you are a beginner trader and know very little there is no cause for alarm. These platforms for the major part have been designed to simplify all the steps for investors and are in fact created to be easily understood and used by complete novices.
How does it work?
The operation of these gold trading platforms is extremely simple. After having completed your first deposit you may enter directly onto the markets using what are called CFDs or ‘Contracts for Difference’. If you believe that the price of gold will rise then you simply place your chosen amount on this asset for purchase, and then resell your position when the price has risen enough.
On the contrary, if you believe that the gold rate will fall then you can take a sell position and resell your position when the rate has fallen sufficiently.
Of course, in order that the profits accomplished are really worth it, the difference in rates needs to be reasonably large. These trading platforms that enable you to trade gold online have however thought of everything. In fact, they enable you to use a leverage effect that multiplies your profits, or losses, by 100, 200 or even 300. Therefore with only small variations you can accomplish an interesting return.
Which trading platform should you choose?
Now that you have understood how to trade gold online through a broker or Internet trading platform you need to choose the one you will use. This choice requires serious thought and should not be taken lightly. The best way is by comparing different points such as;
- The leverage effect available.
- The tools available (analyses, signals, charts…).
- The conditions relative to deposits and withdrawals.
- A possible welcome bonus (amount deposited on your account on your first deposit that is often proportional to the latter).
- The quality and simplicity of the platform itself.
However such a comparison can take a while to do. This is why our site places a complete comparison of all the market offers at your disposal, taking into account the different factors. Make your choice rapidly and start trading gold online simply but efficiently through a specialised broker.
What is the best moment to buy some gold ?
When we wish to take a stand on the market of the gold, the most delicate question with which we are quickly confronted is to know what the best moment to buy some gold is. To help you to answer this thorny interrogation, here is some advice to buy at the right time and hope to realize a maximum of profits.
What are the reasons which incites to buy some gold?
To know if it is the good moment to invest in the gold, it is enough to ask some questions and to draw from it simple conclusions.
First of all, observe the financial and stock-exchange markets which will give you very good indicators on this subject. The main factors which have to incite you to buy some gold are:
- An important increase of the inflation
- An unfavourable world economic situation
- Strong fears of the investors as for the economic growth and the resolution of the crisis.
- Successive declines of the international stock indexes
- An increase of the problems of budget deficits of the various important countries
- An important interest from the media for the economic and financial current events
- A fall in prices of the US dollar on Forex
- Difficulties finding solutions of the crisis quickly
In such a context, the gold indeed plays its status of safe investment. It is indeed this particular status which makes that the gold represents an investment interesting in times of financial crisis because the gold is considered as a safe value.
How to verify technically the best moment to invest?
For that purpose, you just have to look attentively at the monthly graphs on the gold. So locate the moment when the average is the lowest. When the price of the gold will approach again this value, it will be the ideal moment to take a stand in the purchase.
This fast analysis indeed allows you to take a stand at the best price to resell some time later at a higher price and realize so important profits. It is not then necessary to wait for an upward trend to take a stand on the gold.
How to analyze the other important indicators?
As we mentioned it, the general economic climate is extremely influencing on the prices of the gold. When we are interested in the historic data of these prices, we indeed notice that the price of the gold tends to increase as the world economic situation deteriorates.
This phenomenon is due to the fact that the private or institutional investors want to secure their placements and their investments in case the other markets would come to collapse. In this direction, other more psychological data can indicate you the next rise in prices of the gold.
After all, to rule effectively on the future of the gold, it is enough to give attention on the economic and financial news. More these news will be negative and made public, more the investors will be afraid and will withdraw from markets. Now, these investors will come from this fact to reinvest their money in a more reassuring market, this of the gold.
Another outside indicator is to be privileged when you wish to buy some gold. It is indeed of course the price of the Dollar. The gold being estimated and bought in Dollar, wait that the parity EUR / USD is important to take advantage of some gold in the best exchange rate. Besides, a general decline of the Dollar in front of rival currencies is often convenient to investments of mass entailing an appreciation of the prices of the gold.
Finally, the best moments to buy some gold are at present many and you just have to know how to recognize them.
Start trading on the price of gold:
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