What are the different ways to trade gold? (P2)
As we know, there are three popular and well-established ways to invest in gold as an asset.
In previous lesson, we have learned about trading gold using CFDs and gold ETFs. We learn another way to invest in gold as an assest today.
Trading gold-related equities
A third method would be to own a portfolio of equities that perform in line with the price of gold. For example, the gold deposits owned by gold mining companies may still be in the ground, but if the price of the metal moves so will the firm’s share price.
The correlation between the price of gold stocks and gold itself can vary. Equities, after all, are also subject to other price drivers such as broader stock market volatility.
Each of the methods has its pros and cons. An interesting side note is that the most die-hard gold-bugs will stick with having at least some of their position held in physical form where they have physical access to it.
Their take on the situation has something of a doomsday feel to it. The thinking is that any scenario that sees gold being used as legal tender would be one so severe that your internet connection, broker’s offices or even bank vaults might no longer be secure.
Reprinted from eToro, the copyright all reserved by the original author.
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