Gold – Traders versus Owners

Gold trading has been on the increase in today’s financial circles as this commodity has turned into a better asset in a decade than paper and real estate assets.

One thing that individuals who wish to invest in gold must be aware of is that trading gold offers not only great security, safety and potential profit over the long run but also anxiety and fear as gold prices can be very volatile over the short term.

Volatility of Gold prices

Gold price volatility is acceptable if it would perform as forecasted but it is rarely the case, especially in the short term; hence many would conclude that successful gold trading requires much luck than skill and a ‘crystal ball’ is preferred.

Trading gold futures contracts is actually very similar to other commodity futures trading as this form of market trade thrive on speculation and to promote hedging.

Gold futures trading is not the same as owning the gold even if the trading futures give high leverages for rising gold prices as this leverage can also increase the loss factor with falling gold prices. There is no safety or secure feature of gold for the gold trader.
Gold owners will enjoy the potential profit of gold in the long run while the gold trader reaps only as per the speculation of gold prices in the specified future.

Safe, Secure and Liquid Potential

Over decades gold is the attested medium of exchange all over the world, whether collectively as nations or individually. For instance, way back in WWII, pilots were entrusted with gold coins in their money belt or secret compartment to aid them in their escape from enemy territory as gold was universally recognized as money. Gold then was taken as the trade commodity during wartimes and this remains the standard practice today.

No other commodity, even silver, works the way gold does in the financial and trade environments, which is the main reason for many to keep a physical quantum on hand, unlike the perspective of gold traders.

Gold futures contracts trading can make or break you financially but gold has never been worth zero, whether in bull or bear markets, whereas the same is not true for gold futures contracts.

If you are really interested in benefiting from the full potential of gold, the best recommendation is to go for owning the gold instead of trading it. If you like to have more paper assets, try trading gold. If you really want to benefit from all that gold offers, buy that shiny metal!