When it comes to the gold market, there are 3 categories of interested parties: traders, investors and collectors. However, it seems that the last group has been most successful in reaping a profit with this commodity.
Traders of Gold
People who trade gold are known as gold traders who basically purchase to sell gold in futures contracts whose market is quite volatile but brings big profit if the trader can anticipate and make the right move to take advantage of the gold price fluctuations.
Gold traders are in the market for a quick earning and not so much for security and safety investments. Many traders operate on a buy and sell mode hoping to win big on either side of the market. The way futures contracts are operated ensures definite big bucks opportunities for the traders as well as possible great loss. Both aspects can be very rapid movements.
Investors in Gold
Those who invest in gold operate with a different motivation where the long term perspective is adopted for preservation of capital rather than a quick gain. Gold investors view gold like an insurance policy on their finances, buying but hoping never to make a claim.
Gold proved to be a safe haven for people who had embraced it to face difficult times and crises as attested in time eternal. Although no one hopes for difficult moments in life, one still needs to prepare for the unexpected; that is the handiness of gold in possession. Gold is the final asset that gives instant liquidity over other failing financial assets.
How would gold investors react when the gold price soars? Some may move to make a gain if the rise proves too attractive and tempting to bypass. Gold’s potential profit or risk is not equal to those of other futures contracts that are highly leveraged and hence it proves to be a safe investment any way you look at it.
Collectors of Gold
The one who collects gold, as in rare gold coins, is known as a gold collector. But this term is blurred today with the gold investor as a gold collector may also have an ulterior motive for his gold collection. Many gold collectors are actually investors at the start of their venture who turn collectors in the long run as they realize the possible potential of gold whereas some investors were actually collectors who develop a profit taking perspective when the price of gold rises continuously. This change of status is mainly influenced by the huge potential profit enjoyed by rare gold coin owners.
Gold coin collectors have a distinct attachment to every coin they put into their collection and hence the intrinsic value is usually higher than the face or market value. A collector’s true intent is to increase the gold coin’s value in his possession and this is usually achievable over the long run which is the best way to earn huge profits.
There are many notable collectors who reaped big on their gold collection such as Harold Bareford whose 1950s $13,832 collection brought him $1.2 million profit in 1978 while Louis Eliasberg sold his $300,000 collection at $12.4 million in 1982.
Individuals who plan and strategize on their gold collection carefully with quality and rare pieces can reap more profits than others.
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