Gold is undoubtedly one of the most appreciated metals amongst professional traders, at the moment – and that is perfectly understandable, given the fact that the gold prices have been on the rise lately. Most traders regard gold a very save haven asset, almost as safe as platinum, and if you are just getting started in the trading industry, then here are several professional and useful tips on how to trade gold efficiently, in order to minimize your losses and to maximize your gains:
1. Never Invest More Money In Gold Than You Can Afford To Lose
A very common mistake amongst beginners in the trading industry is that they often end up buying too much gold – in spite of being one of the safest and most stable metals at the time being, there are many other valuables from the same asset class that have fallen in value. Statistically speaking, most professional investors invest less than 5% of their portfolio in gold, while beginners are advised to invest no more than 3%.
2. Gold Miners Are An Outstanding Way To Gain Exposure
If you are committed to gaining exposure to gold, then look no further than gold miners. The share prices of mining companies have increased lately, thus making them hold better value. Nonetheless, it is important for every gold investor to remember that shares in gold mining companies will be affected by all broad sell-offs in equities, which means that this metal can be very volatile and easily influenced by the market conditions.
3. Exchange Traded Funds Are A Good Choice
As it happens with platinum and silver, investors who have decided to trade metals should know that gold ETFs (exchange traded funds) are a great way to gain further exposure to gold. Those who are interested in doing so should know that they can easily buy and sell shares on a daily basis, and all funds are always backed by physical gold, which means traders can rest assured knowing that their money is in good hands. However, it is important to remember that some yearly management fees may apply to these gold exchange traded funds. Also, if you just want to “test the gold market”, then you should only use gold exchange traded funds in the short-term: the longer the period, the higher the risks.
4. Never Underestimate The Value Of Holding Physical Gold Separately
Last, but not least, no professional gold trader will focus exclusively on physical gold – as mentioned above, the metal trading market is a highly volatile one, and abrupt changes in the gold prices can occur when you least expect them. This is why it is of utmost importance to hold some physical gold in vaults or in nominee accounts, as this is the only way to be sure that the metal is held in your name. There are numerous trustworthy, experienced and reliable gold storing services that offer such services, at affordable yearly storage costs. In spite of the fact that holding physical gold does offer the owner some peace of mind, the only downside is that finding a physical buyer can be a time-consuming process.