Commodities and commodity trading have always been favorite instruments for many global investment managers. Automatically, the capital turnover that occurs in the commodity market is quite competitive. Commodities can be defined as goods that are physically substantial, such as agricultural and mining products. On the commodities, investors or traders can make a purchase or sale either through the futures market or a spot market. The commodity instrument is one of the few investment instruments in which participants with small capital can possibly earn decent profits in a relatively short period of time. CFDs on commodities are also popular, though finding a “place to trade” is something important, and capital.com is one of thereliabletrading platforms.

Commodities as a trading instrument have a high risk reputation, especially for individual investors. In fact, the risk of trading in the commodity market will not be more than the risk you have set yourself. The rest is a matter of risk of price movement, which tends to equal the risk of other asset price movements such as stocks or bonds. Investors need to carefully recognize and monitor the factors that drive prices, such as taxes, inflation, interest rates, weather, transportation and technology costs, each of which has different effects on each commodity.

In general, commodities are divided into two large groups, the first one is hard commodity which is generally the result of mining such as gold, silver, oil, and other commodities that have limited resources on earth and generally require high resources and funds to obtain it. The second group is called “soft commodities” - those are the products of agriculture such as sugar, chocolate, coffee and others. As the many types of commodities traded on the world market, our focus in this article is limited only to one of the hard commodities, namely, gold. The gold can be traded on the spot, futures, options or cfd markets, generally in the form of contracts.

Supported by history

History notes that the metal has had a high value since ancient times, especially precious metals such as gold and silver which for centuries have become a medium of exchange in trade transactions. Gold and silver by most investors are still regarded as a good investment field that continues to shine.

How to invest in gold

Through technological developments and commodity trading, gold can be invested in through various means as well as with extensive product coverage such as Gold Bullion, Gold Certificates, Gold Accounts, Gold Exchange Traded Funds (ETFs), Gold Mining Shares and Gold Mutual Funds. Another way of speculation on gold price change is through cfd trading.

There are at least two popular sections of gold trading:

Gold Bullion
You can buy gold commodities directly in the form of bars or coins. If you buy gold bullions or gold coins, you are dealing with physical gold. In this case, caution needs to be take place, especially regarding storage and insurance.

Buying gold physically was a popular way of investing centuries ago. These precious metals provide assurance to investors that the value of these assets will never be worth zero, as is likely to happen to stocks or other financial instruments.

Gold Certificate
Buying a gold certificate is one way to own gold indirectly. You will only hold the certificate without holding the physical form. Investors will benefit from security and storage issues. However, this way is still not popular in the eyes of investors because they still do not feel to have gold if it does not have a physical form.

There are many other methods that can be used in gold trading but learning the above two methods is the first step for anyone who is really serious in trading.

By Anne Bago

© 2017 Anne Bago - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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