How to Make Money on Gold

04 December 2009 - Xenia Rainey (Which Way To Pay)


How to Make Money on Gold


It is no secret that the value of gold has increased greatly this year.  New records for the price of an ounce are constantly being broken and many believe that the precious metal’s journey is going to remain upwards for some time yet.

Investors in both emerging and developed nations are taking advantage of the trend and there are plenty of ways that everyone can get involved.  These include:

-    Sell Gold on Cash for Gold websites

-    Buying and selling at auctions (websites and live)

-    Speculating on the market as a Futures Trader

Guessing the Price Trend

The last of these three is one of the most exciting ways to make returns on gold.  However, it does require some research, a liking for strategic thinking and a bit of time!  Additionally, there is a risk to your capital in any type of investment trading.  Before getting involved, make sure you are fully aware of these!

What does the Futures trader do?

The Futures trader is speculating on the future price direction of a commodity – this can be gold, but it could also be other commodities like grains, energy, cotton, currency or meat.  For today’s purposes we are going to concentrate on gold. 

So, if the trader thinks the price of gold will increase at a set date in the future, they buy a futures contract.  If the trader thinks the price will be going down, they will sell the futures contract.

Derivatives Trading?

Unlike regular shares dealing, Futures trading means that you do not actually have to take ownership of the item you are buying (i.e. the gold).  You are simply speculating on gold and which price direction it will take and making returns based on successful positions.  So, you are making money out of gold without actually taking ownership of it.

Central Exchange

Unlike Forex trading, Futures takes place via a central Futures Exchange.  Companies are listed on that exchange and the traders can access trading platforms via these.  Trading takes place electronically and mainly on the internet.  This means it can take place almost anytime and from anywhere in the world.


Futures trading is made on margin.  That means you pay a percentage of the value of the contract to the broker.  The amount of this is set by the broker or exchange and will vary according to price movements.  However, generally the margin will be between around 2 and 10%.

There are other costs involved in being a Futures trader – including commission.  Find out more on these in our Information Library.


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