Experts are of the opinion that a portfolio should be diversified in order to yield decent profits, especially with assets which will not be drastically affected by the hostile fluctuations of the market. An ideal investment which will provide diversification is the precious commodity, gold. Gold’s presence in a portfolio may provide a safety net for investments, as shown in an analysis by forex market website FX Street. It further stated that, historically, a gold allocation adds substantial enhancements to the risk-return profile of a portfolio, aside from reducing overall volatility and enhancing returns.
Gold trading is one of the popular methods delved into by investors in order to effectively diversify portfolios, and ultimately gain profits. Forex Trading Rookie in an article gave us the basics of gold trading. Describing the metal as a “permanent asset”, it enumerated the following ways on how to trade gold:
- Buying gold bullion – this has the advantage of being in charge of what happens to your gold coins or bars
- Investing in funds – Exchange traded funds (ETFs) or mutual funds are some of the easiest ways to invest in gold without actually having it on hand
- Future contract trading – this involves an agreement to buy a certain amount of gold for a set price at a pre-agreed upon point in the future
Another tip is given in a guide on gold bullion at BullionVault, a gold trading site based in the UK: active gold traders may cut costs by slashing commission fees to the minimum. This will then enable direct access to the chasm between buying and selling price, thus a negative cost per trade can be enjoyed. Simply accepting gold prices set by a broker is not advisable, it further added. Trading gold will be more profitable if a trader sets his own price for minimal fees.