Investing in South Africa’s gold Krugerrand coins, such as those that you can purchase here MoneyMetals.com, is one of the easiest routes to take in getting started with gold trading. Acquiring bullion like gold coins, bars and ingots and selling them when the market price spikes is a straightforward means of making a profit from gold trading. There are also other means of trading gold where you don’t necessarily have to own and store the precious metal physically. These include trading in commodity exchange-traded funds (ETFs), common stocks and mutual funds, and futures and options.
The Advantage of Investing in Physical Gold
The main advantage of investing in physical gold is that they are tangible, which makes them a “pure asset” as opposed to a “paper asset.” Physical gold is an actual asset and along with it comes an intrinsic value that is largely unaffected by currency fluctuations and inflation. In fact, even when paper currency loses its value and purchasing power because of inflation, the price of gold remains stable.
What makes investing in physical gold even better is that an inflationary environment will even encourage investors and traders to purchase gold as a hedge. The demand for more gold will cause its price to increase. Owning physical gold as an asset eliminates the chances of you defaulting on it contrary to paper assets.
Along with purchasing physical gold comes the risk of theft and fraud. This makes it even more important for beginners to do their research on sellers thoroughly before making any purchases. Whether you are purchasing Krugerrands, American Gold Eagle coins or PAMP (Produits Artistiques Metaux Precieux) ingots, take the necessary precautions by making sure that you purchase only from authorized, reputable and established gold sellers.
Another issue when accumulating and storing physical gold or bullion is that you also run the risk of theft. Have a safe, secure place for your gold before buying them. Alternatively, some sellers also offer secure storage for your gold at a standard fee.
Other Methods of Gold Trading
Other ways of trading gold include day commodity ETFs and gold futures. These types of speculative gold trading are not for those who are just starting out in the business. Keep in mind that physical gold is not actively changing hands in these types of gold trading but is often in the possession of a trust that holds the gold in reserve.
Like many other forms of investing, transactions in these types of gold trading take place electronically, and losses and profits reflect on the account of the trader, with which you may also need to open your own account begin trading. After opening an account with a trader, you need to fund it with at least the minimum required trading budget.
Should you choose to do business in this type of gold trading, keep in mind that you must first familiarize yourself with how precious metals market works. Once you have done so, you’ll need to review historical trends and get a feel of how the market responds to a wide range of influences to make better decisions while trading.