Precious Metal

Precious Metal

Precious metal trading refer to investors in the precious metal market optimistic about the situation, through the buy low and sell high process to earn the difference. But it also can not be optimistic about the economic prospects of the case taken by hedge transactions in order to achieve the preservation and appreciation of assets. Precious metal are traded in the form of CFDs so that investors can hold the bull positions or bear positions at market prices. Gold investment originated in Europe in the eighteenth century. With several hundreds years of development and the ever-increasing of the number of participants and maturity of the market trading behaviors, various gold-based investment products have appeared in the market.

Precious metal as a special commodity, its price will appears frequent fluctuations under the influence of political situation, economic environment, regional conflicts and other factors. In addition, gold is settled through dollar or the euro, so the dollar or the euro‘s up and down will also affect the fluctuations of gold price

The gold margin transaction is also called gold CFD. As the name suggests, in the gold market, the transaction between buyers and sellers is effected by price fluctuations, is the transaction price of gold contracts rather than gold in kind. So the gold price difference is essentially a derivative financial products, reflecting the buyers and sellers’ expectation on the direction of price fluctuations. Gold margin trading is now the most important and popular gold investment tool on the market today. Through the use of gold CFDs, investors can save the cost of custody fees, storage fees, insurance premiums, appraisal fees, transportation fees and taxes in physical gold transactions, and reduce the additional costs of gold trading. Please refer to the following example to understand how to make a gold margin transaction: Platform Quotation: Gold against USD on Jun. 19, 2014 offer is $ 1,280.20/1,280.70 at 100 times leverage. Direction of transaction: buy gold rise, quantity: 1 board lot = 100 ounces and each ounce = $1,280.70; trading volume: 100 x $1,280.70 = $128,070; requiring margin: $128,070/100 = $1,280.7; if the gold price rises to: $1,310.20/1,310.70, price for closing: $1,310.20, the total value of 100 ounces valued $131,020; trading profit: $131,020-$128,070=$2,950. If the gold prices drops to: $1,270.20/1,270.70, price for closing: $1,270.20, the total value of 100 ounces valued $127,020, the trading loss: $128,070-$127,020=$1,050