Gold Futures – The Capital Gold Group

There are 8 different ways to buy and invest in gold:

1. Bullion coins and small bars,
2. Big bars,
3. Mining shares,
4. E-gold,
5. Futures,
6. Gold Backed Securities,
7. Gold Pool Accounts,
8. Jewellery.

Of the above lets look at gold as a futures option. Gold futures are a sophisticated financial product. Gold futures or bullion trade is part of commodity futures. One can enter in to a contract of specified days to buy or sell. One can buy or sell for the future. The actual transaction would take place at the prevailing rate when the contract is signed and the difference of buying and selling constitutes the profit of the transaction. It also has an unique margin trading system where one is not required to pay the whole amount upfront. One can pay only 5 to 10 percent of the value. One can specify in the contract that one is not willing to take possession of the product. Gold bullion is historically an inverse proxy to the stock market. The market for gold futures is deep and liquid. For traders who don't want custody it eliminates the hassles and costs of settlement and storage. This significantly reduces costs. It is quite easy to track the true worth of a futures contract by following the exchange price. One can short sell provided one can buy an equivalent contract back before the contract expires, one is able to profit from a falling price. This can only be done on spot markets but with great difficulty because it requires a seller to borrow gold for delivery, which is next to impossible for retail investors.

There are some disadvantages associated with gold futures. There is a possibility of credit risk. This is the risk of default during the period from trade to future settlement date. Futures contain a built in price differential which can obscure their true value. Seeing where the costs are in, futures trading is not easy to do. For investors who are prepared to underwrite for a short period the systemic risks of derivatives gold futures remain a sensible and cost effective way of executing a short term gold punt..The expense in a future is the cost of taking out a notional promise, which one should expect to be pretty low. The paradox in investing in gold futures is that a future is itself a 'derivative' instrument constructed on credit.

If you buy gold futures you are betting that in the future the price of gold will continue to go up. You are setting a time and a price in the future that you think will earn you a profit. Only buy gold futures with money you can afford to lose as buying gold futures is nothing but just gambling.

A futures contract of any kind is an agreement that one will pay the current price at some point in the future, regardless of the price at the time. If the price goes down then one tends to lose money and if the price rises then one can make money (this is a "call" contract; you can do the same thing in reverse with a "put" contract). What makes investing in gold futures so potentially profitable and so risky is the margin. Successful traders in gold futures are the ones who can limit their losses while taking advantage of profit opportunities. Futures trading is not particularly complicated and need not be risky. Typical costs for trading gold futures are the bid-offer spread, the commission, and the financing cost of the margin.

The Capital Gold Group gives you the opportunity to make use of this valuable investment option. The past experience gathered by the team will help evaluate the benefits as well as the negatives of the investment option and will give you the appropriate suggestion as per your investment appetite. For further details please visit www.safeasgold.com