Commodity Futures Trader

Posts Tagged ‘gold futures’

Trading gold futures does not require gold to exchange hands. A gold future refers to an agreement by the buyer to buy a certain quantity of gold at a pre-set price at a future time. Gold futures are the best way to gain leveraged exposure but are unpredictable. Gold futures are a fascinating and important realm, but they do not deserve the level of mysticism and dread they seem to generate. The futures priesthood that ‘informs’ gold-stock investors often takes events out of context and disseminates half truths intended to sway sentiment.

Gold’s significance in world markets make COMEX Division gold futures and options an essential risk management tool for commercial operators. Traders watch Comex contracts as an indicator of fizz in the market. Trading gold futures securities happens largely on paper: most of the gold bought or sold in the futures market never moves. Gold futures are typically traded by “speculators,” investors who acquire or sell gold futures but aren’t interested in the physical gold, versus “hedgers,” who do value the gold itself as an investment. Trading gold futures also has low fees.

Gold options are also powerful and cost-effective investing instruments, that can be used to own desired quantity of gold in future, and can also be used to hedge price changes of gold that you possess. Every futures contract is for 100 troy ounces.

Gold has long been a fall back investment for individuals during times of financial insecurity. With the deepening of the current recession, many investors have turned to gold as an investment choice, driving the value of gold up in recent years.

The law of Supply And Demand

Gold is a commodity and like any other commodity, the price is largely driven by supply and demand economics. In simple terms, the less there is obtainable of a commodity in order to meet demand, the higher the price goes. When supply is higher than demand, the price drops.

Gold supplies have come into higher and higher demand as the world financial system has increased demand for gold. While large portions of the gold market are and have historically been based in jewelry demand, global shifts have changed which countries are leading demand for gold jewelry. The five countries that primary drive gold jewelry demand are China, India, the United States, Italy and Turkey.In many of these nations, gold is intertwined into the culture. Gold demands are also spread around the entire world, with 72 percent of demand in Subcontinental Asia and the Middle East as of 2007. These numbers are likely to have shifted as the world economy has changed and shifted since then.

Gold In The Industry

Besides jewelry demand, gold is also used in multiple industrial applications. It is used in electronic and biomedical applications because of its high resistance to corrosion and bacterial growth. Also it is highly bio-compatible, making it very useful for medical components. Not to forget the extensive use of gold in sectors like fuel cells.