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Making money out of gold futures @ Jewel Info 4 U
By: Madhubanti Rudra
Summary: We are in the middle of a great bull run on gold! If you are ready to take the plunge and want some cool returns by making a minimum investment, then the article is specially written for you. It will help you understand the nuances of futures trading in gold.
'Futures trading' is a broad term
involving a range of commodities
from wheat to crude oil. Under the
present global financial scenario,
'futures trading' in gold has become
especially popular. Gold is in fact
one of the most traded metals in the
present times.
So what does trading in gold futures
actually mean?
 A future trading in gold refers to a
kind of investment where to make
profits, the investor uses his
speculative abilities to envisage
the price of gold rising or falling
in the future.
Gold and all other commodities are
traded between millions of investors
across the globe, every day.
'Futures trading' in gold relies on
the basic business rule that is:
make profit by buying gold at a low
price and sell it for a higher
price.
The features of gold futures trading
'Futures trading' of gold is in the
nature of speculative 'paper'
investing. As such you don't need to
run the hassles of holding gold and
protecting it; you only need to keep
a piece of paper known as a futures
contract.
- Investment in futures of gold
comes with a specific expiration
date. However, you are not bound to
hold the contract until this date.
The fun of futures trading lies in
your freedom of canceling the
contract anytime you wish.
- Let's explain this scenario with
this example:
- The Gold contracts are sold
internationally in February, April,
June, August, October and December.
If somewhere in the end of April you
are tipped that gold price will rise
till mid June, you can buy a June
gold contract. As the expiry date
approaches closer, the contracts
become more liquid and there are
more traders in the market. This
helps you make a reasonable profit
preventing the price from soaring
too high or dropping too down.
- But if you come to know that gold
price will keep on rising till the
year end, you need to buy a December
contract for maximum gains.
- There exist specific
standardization norms for all
commodities. Not only for gold, but
for all the commodities, investors
have to hold a specified amount and
abide by the prescribed quality. For
Gold futures it is the 100 troy
ounces of 24 carat gold.
The gold futures can be traded in
many ways: it can be treated as a
pure speculative product, as a hedge
against inflation or a purely
commercial hedge, or as an asset
class of investment, futures
contracts are the most viable
product for making money amidst all
the present day financial chaos.
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