Cash In On Gold

One of the best investments you can make these days is investing in gold. This just isn’t a recent occurrence either, gold has been a great investment for a long time. People view gold as the best investment you can make because it’s a physical commodity that can’t lose its value. There is only so much gold in the world.

We are going to take a look at some ways to trade and invest in gold in this article so you can hopefully cash in on the craze right now.

Trading Gold

There are many ways you can trade gold, but not all are the best. Some are better than others.

Spread Betting

The first option we are going to take a look at is spread betting. The market leader in spread betting is IGindex. This group started as a way to help investors and everyday traders, trade gold. They allow you to trade the daily spot price of gold, or you could also bet the near quarter futures. If you plan to hold your trades for two weeks or more, then using the near quarter futures is your best option. Spot trading has overnight rolling fees that can add up quick.

Benefits Of Spread Betting

• Leverage
• No capital gains or income taxes
• Simple to trade short or long term
• No commissions, allowing you to make smaller bets if you like

Disadvantages Of Spread Betting

• You aren’t purchasing actual gold
• Risk of overexposure if making small trades
• Leverage

You can also trade gold on the futures market. It’s a popular option for many larger traders and is similar to spread betting. There is a larger cost of entry but the advantage is the smaller spreads compared to spread betting.

Betting On Fixed Odds

Fixed odds betting is just a simple bet that is easily compared to a sports bet. With a fixed odds bet you will either win or lose, if you win you get the maximum award, but if you lose, it’s all gone.  Fixed odds betting is also sometimes called binary bets. Look around at your favorite brokers, they will likely have a form of this type of bet.

Advantages

• No taxes
• Simple to use
• Low barrier of entry
• Risk is fixed, little unknown

Disadvantages

• If the price of gold surges during your bet, you won’t make anything extra.
• The spread built into the bet may mean the gold might have to move significantly

Covered Warrants Trading

Covered warrants is the best of both worlds. This type of trade combines the benefits of fixed odds, and spread betting. Your risk is limited but the upside is huge. When doing this type of trade, you would purchase a warrant for a set price, your risk is limited to the price you paid.

There are two important parts involved with this type of trade. They are called the time expiry and another called the strike price.

The strike price is a predetermined point in your trade when it will begin to start making money. The time expiry is the length of time you have decided to allow the trade to run.

Advantages

• Upside is unlimited
• Risk is always known, right from the start
• Tax free, but you must trade through a SIPP

Disadvantages

• It’s more expensive
• It’s only tax free if you trade through a SIPP