Is gold trading a viable venture, and is it still worth it? Many people ask this question when thinking of ways to invest their money. Considering the number of phony investments that pop up, you’re not wrong to ask.
Gold Trading involves trading on the price movements of the gold market, intending to make profits. If you’re wondering if gold trading still holds some value in today’s world, this article provides an answer.
But first, let’s take a look at the underlying commodity and what it’s used for.
What are the Uses of Gold?
Gold is a widely used commodity and precious metal. For centuries, civilizations only used gold as a store of wealth, value exchange, and jewelry. However, technology and science have expanded how we use gold.
In the electronics industry, manufacturers use gold as a conductor of electricity that can carry small amounts of current and stay corrosion-free. They use gold for connecting wires, soldered joints, switch and relay contacts, connectors, and connection strips.
Also, computer manufacturers use gold in the production of a standard computer. For example, gold is present in the edge connectors that mount memory chips and microprocessors into the motherboard.
In dentistry, dentists use gold for restoring and protecting the teeth because it’s non-corrosive and is less likely to cause a reaction. Specifically, dentists use gold for dental crowns, tooth filling, and inlays and onlays.
Benefits of Gold Trading
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Unless there’s a sudden or gradual replacement for gold, this yellow metal isn’t going anywhere soon, nor would gold trading. However, here are some benefits of gold trading that might interest you:
Gold is a hedge against inflation.
As a commodity with so many beneficial uses, gold inspires economic confidence. Wherever there’s a crisis or economic downturn, people always look for ways to store their wealth.
Gold has been this means of storing value because its price rises when there’s inflation. So when general prices rise, gold prices rise too. And if anyone has their money in gold, their investment will increase.
Gold maintains its high value over time.
Compared to paper money, gold has stood firm in its value. For example, suppose you had $50 to buy a pair of shoes or trade gold via a platform. In the next one to five years, your $50 gold units may be higher in value than the shoes you’d have bought.
Gold trading with small beginnings
One of the downsides of trading physical gold is that you might find the minimum amount a bit pricey. However, gold trading allows you to partake in the gold market while starting small compared to buying physical gold.
Some people might see the price of physical gold and run from trading gold, assuming they need a lot of money to start trading. However, the low deposit amount removes the price barrier of entering the gold market.
Depending on the gold trading platform you use, you can trade gold markets for as low as $10. Your $10 might seem small at first, but if you make a consistent and continuous investment, it begins to add up in the future.
A golden rule in financial investment is to have multiple unrelated income streams. It’s considered financial suicide to have your income and investment portfolio tied to only one source or form of investment.
Gold trading is one of the numerous ways to diversify your investment portfolio. In addition, by investing via gold trading, you protect your finances from the rise and fall of other investments.
If something happened to your other investments, you wouldn’t be stranded. However, due to how volatile gold markets can get, it’s advisable not to put the bulk of your wealth into trading gold.
Gold trading offers easy liquidity for your money invested. Traders can easily place a sell order on their gold units bought and recover their funds no matter how much.
This way, you’re not trading in something that’s not easily disposable. For example, if you only owned real gold, you might not be able to convert your investment to cash as quickly as trading platforms allow.
Gold Trading As an Alternative to Physical Gold
Storing pure gold as an investment can be hectic because you may not own safe or appropriate storage space. Because of this, some people consider it better to trade gold on a trading platform than to own physical gold.
With gold trading, traders can explore the various ways of investing in gold. They wouldn’t need to worry about storage or insurance. Everything happens at the tip of their fingers.
If you still want to buy physical gold, storage shouldn’t stop you. Combining both would still do your investment portfolio a world of good.
When you’re thinking of getting into the gold market via gold trading, the first thing to do is research. Know about the industry, the trade, the market, and the different types of gold transactions available to you.
Secondly, identify what your trading strategy should be. Are you going longterm or shortterm? Your decision would determine how often you trade and what types of trade you engage in.
Thirdly, check out trading platforms and choose the one whose features are most suited to your needs. Then, ensure their fees and minimum deposits match your budget.
Having picked your strategy and trading platform and deposited funds into your trading account, place your trade. Keep in mind that you’ll need to monitor the trends and news to know what moves to make next.
Gold has shown a track record of maintaining its value, storing wealth, and hedging against negative economic situations. By extension, gold trading offers you an opportunity to profit from this valuable commodity without owning it directly.
As with every investment, gold trading is not without its risks. So remember to do your research