Gold has always been one of the most traded precious metals because of its profitability and unique features. No matter if there’s an economic turmoil or the gold prices move downwards – traders can still have the opportunity to make profits. For a well-diversified portfolio and great financial results – every investor should consider trading gold!
The Gold Market in 2019
Most people think that in gold trading, profits can be obtained only when the prices of the precious metal rise. However, investors know that gold is equally capable to generate profits when the prices are dropping – a strategy known as shorting gold1. The market always tells the investor when to act and certain variables indicate how to act in the best possible way. These variables are the price drivers of gold and can be classified in four broad categories: economic expansion; market instability/risk; positioning/momentum, and opportunity cost.
This year has begun on a positive note – in spite of the tumultuous final months of 2018, when the gold speculative positioning has hit record lows. Experts believe that in 20192, investors will continue to favor gold as an effective diversifier, as well as hedge against risk and uncertainty. Europe is facing numerous challenges, Brexit being the most complex; while more and more governments around the globe start to embrace protectionist policies, which can lead to undesirable longer term consequences for investors.
While the market risk is projected to remain high; the emerging markets, which represent 70% of gold consumer demand, can be a strong indicator of the long-term performance of the precious metal. On a global scale, India and China are the most promising, as India’s economy is expected to grow by 7.5% and China will implement a lot of economic changes that will boost commodity markets. Moreover, central banks continue to buy and show a big interest in gold; a situation which will most likely remain unchanged due to the gold’s role as a safe haven asset and other advantages.
The advantages of Gold Trading
In the past decade, gold has continuously been seen as a worthy and low-risk investment. Let’s see what list of major advantages the precious metal brings on the table:
- It is a highly liquid asset, which means it can offer high returns.
- The global demand for gold is strong and stable, which is a positive price driver, as well as one of the most important factors that determine its value.
- It is the best hedge for financial market risks.
- Prices are always up in the long run.
- It is an effective portfolio diversifier.
- It can improve risk-adjusted returns.
How to invest in Gold
While the option of physically owning gold bars and coins is still possible and practiced; trading gold online with a broker is much easier, it has a lot of benefits, and it is by far the most popular method. You can trade anywhere, anytime – and never miss any gold prices opportunities. For example, unlike other assets, gold prices do not fluctuate with big margins overnight, but with small ones; which means that you will lose with small margins. A broker will make sure you get the latest updates and will offer you all the assistance and instruments to help you.
However, choosing a licensed broker that offers professional services and a safe trading environment is crucial; and not a very easy task. To put things in perspective, TradeFW.com is what we consider a licenced CFD broker that stands out in the industry and a safe recommendation. You can trade gold and other assets at the best prices, with an account created for your needs/level of experience; while also enjoying diverse trading tools on a modern and intuitive platform. These things matter more than you think! Before investing in gold, make sure you’re investing the right broker, too.
Gold trading with an online broker can be done through gold Exchange Traded Funds (ETFs), Contracts for Difference (CFDs), or by buying shares in gold mining companies, which is a less common and riskier method.
Is Gold a worthy investment?
To wrap it up, the online gold market offers traders numerous opportunities – given the liquidity of this asset. The fact that it can be a hedge for financial market risks and against inflation is the feature which makes it a haven asset and a safe choice even in the most tempestuous times.
While it comes with a very appealing list of advantages and it is a safe investment; the decisions made by investors are ultimately the ones that determine whether gold is also a promising investment. Gold trading may generate high returns and has proved its purchasing power over time. Without any doubts, it is an asset that could bring a lot of diversity and value in investors’ portfolios.