What is gold futures
Each investor chooses the most appropriate financial instrument he associated with gold, individually. Investor’s income is thus defined not only chosen the correct tool , but also the professional skills of the player market . Not to be mistaken with a preference , you probably know the difference between gold futures and common stock of the company, which works with gold.
Gold futures : trade
Each futures contract on gold and silver or oil is an agreement to purchase a certain quantity of goods taken as a basis . If we are talking about gold futures , the buyer in this agreement becomes the owner of a gold ingot equivalent to 100 ounces of the yellow metal .
Most traders engaged in the acquisition of this type of futures not set themselves upon the expiry of the agreement problem get your hands on physical gold . They are engaged in the sale of gold futures , providing itself from fluctuations in yield between the current price and the price to be determined at the close of the futures contract. Thus, the result is no physical delivery of the yellow metal , but only recorded a positive difference in the account of the investor who made a truthful account.
The trader will profit only only if justified its price forecast for traded goods. Players on the futures market , buying futures receive revenue when their contract price increase. Financial sense to purchase gold futures is reduced to waiting to resell it at a higher price .
Trader , armed with a futures contract , trading may resort to the use of leverage . As a result, he will either receive an increased income or loss is the same . It was such an opportunity has attracted many traders who come to the emergency exchange. Some of them do get excess profits , but the other part loses everything. This fact makes trading gold futures one of the riskiest investment in gold, compared to the other options available. It is important to know that when the gold trade in the conditions of emergency exchange trader himself determines the need for leverage. The benefits of leverage lies in the possibility of substantial savings of the hedge funds in the gold futures positions in any other instruments.
Correlation of gold futures and gold shares
Falling prices for shares of companies most often caused the global economy enters a phase of severe crisis . It also has been a drop in the national currency . Such conditions have led many investors to start investing money in gold to somehow insure. This invariably leads to an increase in the price of gold , which ensures steady uptrend in gold futures and relatively stable tendency of growth dynamics of prices . The situation is aggravated by mining companies have a permanent increase in current expenses caused by , for example, increasing the price of electricity and petroleum products.
Today the market to capitalize on gold futures or hedge against instability of the financial situation , you can use several financial instruments with varying degrees of risk : futures, stocks , etc. However, experts advise not to rush to use them all at once. Safer and more profitable to choose the most appropriate tool for themselves or even their whole portfolio .