Risk and benefits of trading in gold

Posted by Ayesha Jaiswal on July 13th, 2017

Is trading in precious metal like Gold and Silver could be a profitable decision for a trader.Gold is the best platform for traders who are less experienced, gold is considered by most investors because it offers substantial protection against the currency fluctuations specifically during economic uncertainties such as depreciation. An investor can take commodity tips and stock tips suggestions from market experts.

Trading in precious metal like gold and silver does not include physical possession of securities. Gold is traded in MCX – Multi Commodity Exchange, it regulates all the trades in the market. The commodity market is considered as the best market to invest and earn profit at the time of economic changes.The gold market is one of the powerful and emerging market in the world.Gold is widely accepted and most traded commodity, it is a trader's favourite commodity for their different reasons.


Benefit of gold trading

1.It hedges against risk – Gold is most friendly and trusted entity in the world.Although prices of gold always fluctuate, when leveraged properly it can be used to hedge against inflation and to control economic unpredictability thus an investor can make money by investing in gold and other precious metal.


2.International liquidity – Gold has made a universally tradable product all over the world.You can easily find another buyer for your position in your form of currency because gold is a universal currency. Precious metal like gold and silver offers high liquidity internationally.It is easy for an investor to sell your position at any place because of high liquidity.Although, it is risky but you can earn a good return by following strong strategies and latest techniques of the market.


3.Protection against depreciation – Commodities like gold and silver provides protection against economic depreciation. Gold is highly liquid and can sell anywhere in the world because of the universality.It also provides a better result when central bank use monetary policies like inflation and deflation to control currency management.



Disadvantages of Gold trading -

1. The low rate of return – Gold leads to a lower rate of profit as compared to other segments.You have to trade for a longer period to make a good amount through gold trading.


2.High commission rate – Sometimes you will have to pay a high amount of commission to gold and silver sellers. Most of the owners of gold find difficulty in the calculation at the time of selling because they do not have much knowledge about the market.


3.Only for long term period – Gold market investment is ideal for long term period only. If you want to earn a better amount in the gold market you have to invest your money for a long time. Gold is better for the long term, forget gold trading if you are going for short term investment.


The gold market is unpredictable and investments are subjected to risk, it is easy to lose and hard to gain in the commodity market.you should be very cautious regarding investing in right time, if you do not have much knowledge, you can take a suggestion from financial experts who provide better stock tips, stock futures tips and commodity tips to investors.

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Ayesha Jaiswal

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Ayesha Jaiswal
Joined: May 20th, 2017
Articles Posted: 39

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