Gold Investing Online: The Ultimate Beginners Guide 2018

Gold Investing Online: The Ultimate Beginners Guide 2018

Gold Investing Online: The Ultimate Beginners Guide 2018


Gold has been admired by people as a source of both wealth and beauty for thousands of years and is still a much sought-after and useful commodity today. Not least because of its rarity.


So how do you buy, trade, invest in and make a profit from gold?

For starters, and to avoid having to install a safe or dig a large hole in your back garden, you can trade online. In practice, most gold bullion is held by banks in large vaults and depositories, and ownership noted in the records held by them. Smaller physical stocks of gold in the form of coins are matched to the bullion price but are easier to hold or transport, but also fairly weighty.


Every serious investor should include gold as a part of their portfolio of assets and every trader should include gold as part of their trading activities. Not least because it’s price is less dependent on the economic performance of a particular business, industry or country than that of equity or currency-based assets. This gives it a significant advantage for many investors


First, you need to understand the Economics of the Gold market


Drivers in the Price of Gold

The main reason that gold is considered a precious commodity is due to its scarcity. The quantity of physical stocks of mined gold is currently showing growth of less than 2% year on year. The cost of mining for gold is increasing significantly for many gold-producing countries, including China, South Africa, the USA, Canada and Australia. Old mines have been played out and new finds are very rare, and if any made they are much more likely to be located in inhospitable and remote places which adds to cost. In simple economic terms, demand is far greater than supply in the marketplace and looks to remain this way for the foreseeable future.


Gold value underpins most currencies but unlike currencies, the price of gold is not so influenced by the political background or economic performance for any one nation., although it’s price is more strongly correlated to the US dollar than other currencies. However, these two prices tend to move in opposite directions, as the dollar rate falls the gold price tends to rise. Investors at this point view gold as a better haven for their wealth than holding large dollar deposits. Gold holds universal value to all


It is more recession and inflation proof than most other assets. This follows on from the above pattern of investor behavior. As the risks of holding cash in inflationary or recessionary periods increases, with cash purchasing power declining or offering very poor returns, then gold is again seen as a preferable alternative, so driving up the price in the market.

Financial policies by central banks which influence interest rates can also make gold seem a safer way of protecting wealth and securing long-term value. Again, the relationship between bank interest rates and the price of gold is inverse, that is where interest rates are low, offering little return to investors, then gold is seen as a relatively more preferable asset.


Apart from gold being used as an investment, there are also markets for gold for industrial applications and in jewelry production, where demand can also influence the price.

Second, you need to choose which vehicle you will invest or trade in for gold assets

Gold can be bought in many ways and forms:

  • Bullion purchases – buying physicals stocks of gold through gold depositories
  • Investing in rare coins with a high gold content, e.g. the British gold sovereign
  • Stocks in gold mining companies – this is a more speculative way of investing in gold and other precious metals, subject to the performance of mining (or exploration) companies and their access to rich deposits of these commodities.
  • Trading gold on the Forex market – here you do not actually receive the physical product but are betting on the price of the product in the market. The market price is in a constant state of flux, and you aim to buy when the market price is low and sell when the price is higher, pocketing the difference. Some people make their daily living through this mechanism, but it is risky. You need to understand all the charts and graphs of the market and patterns of behavior, with regard to the risks and returns possible for any transaction.
  • Investing in Gold ETFs. – a gold Exchange Traded Fund (ETF) is a financial product which is tracked to the price of gold. These include the London based Gold Bullion Securities (LSE:GBS) and the Streettracks Gold Shares (NYSE:GLD). They offer many of the same advantages to the investor as holding physical quantities but in a much more convenient and liquid way.
  • Investing in gold futures, options or spread betting. –  other financial products that work in ways similar to forex trading.

For Forex, futures, options, and ETF gold investing you will need a broker account, which can be opened online. The broker will charge an annual administration fee of about 4-5%


Brokers for gold trading include:

Plus 500



City Index


ETX Capital

Easy Markets

London Capital Group


Advantages to using Forex and ETF methods

One aspect of Forex or ETF gold investing is the opportunity to ‘leverage’ your investment, that is you can borrow to increase the size of your investment, although this carries its own risks. If the price moves against you, there is still the need to repay any loans or borrowings.

Gold trading markets are highly liquid so allow for more short-term investment strategies than physical stocks, which are more often held for long-term investment.


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