Gold Trading Options Available for Traders

As of November 17, 2011, silver and gold contracts slid into unfavorable realms during the last trading session in the United States. A case in point here is the statement issued by the Bank of England. It said that the debt crisis in Europe would have a significant impact on the local economy. As a result of this declaration, the Euro has recorded a downward movement with respect to the dollar and the US currency has emerged as the clear winner. Silver and gold demand has dipped. Contract gold closed the day in the red.

As long as the debt crisis in Europe prevails, volatile trends are likely to continue. With the significant fluctuations in currency values, people are still relying on gold and other precious metals for investing purposes. Experts believe that the recent dip in the spot gold prices provides traders with an opportunity to invest in the yellow metal. Gold trading includes a number of options for an investor. The choice among these options is typically made based on the trader’s understanding of the market, his investment horizon and the funds he has for investing.

Gold Trading Options: Gold Mining Stocks

There are traders who prefer to not buy gold in its physical form. Instead, they invest in stocks of gold companies. Most traders are aware that the share prices of gold companies are typically higher than the price of the real metal. However, buying gold stocks is not a common trend. This is because it is only preferred by those who keep a close eye on the way gold companies are performing and understand the intricacies of the stock market. The movement of the stock market relies on several factors apart from the value of the yellow metal.

Gold Trading Options: Gold Coins

Gold coins, especially the collectible ones, always seem to be in high demand. The price of gold coins depends on the price of the yellow metal and the weight of the coin in grams of pure gold. The price may also depend on the grading, the condition of the coin and rarity value. Individuals often prefer to buy coins of the highest grades. Alternatively, there are individuals who prefer to spend on coins that belong to a rare series, even if the coins are of a lower grade. The scarcity or rarity value adds to the price. However, the challenge here is to identify a genuine rare coin that is well designed and is in a good condition (use a well known coin dealer).

Gold Trading Options: Bullions

Bullion are a common choice for gold buyers. The price of gold bullion depends on the weight of the coin plus an additional premium that is charged by the seller. Depending upon the country of residence, you can choose to buy bullion of various weights. Common denominations include 1 ounce, ½ ounce, 1/4th ounce, 1/10th ounce and 1/20th ounce. While almost every country in the world mints bullion coins, the designs are different and distinct. Designs would vary over periods in time.

Gold Trading Options: Exchange Traded Funds

An exchange traded fund, also known as an ETF, would represent a fund that’s traded on principal stock exchanges. People choose ETFs as an investment option to hedge risks, enhance their gold exposure and diversify their portfolio.