9 Astounding Reasons Why Everyone Should Start Online Gold Trading in 2020: Did you ever think that why people value gold so much? It doesn’t matter where you go in the world, gold would be utmost important. From prestigious first prize (gold medals) to jewellery, from the time of ancient kings to today’s government gold reserves; why is gold ruling the world for hundreds of years?
There are several reasons behind this. Let’s read some of them.
- Safe Investment
- Tangible Asset
- Almost No Risk
- Anybody can Own (No specialized knowledge required)
Got the idea why gold is always on the people’s favorite list? But, will it be a good idea to trade gold in the securities market?
Online gold trading has its benefits and drawbacks; while many investors heavily criticize the idea, many support it too. But, you do not need to worry at all, at least until we’re here!
This article would clear all your doubts. It contains nine fantastic reasons why everybody should be trading in gold. However, not to be biased, after that we’ll be sharing some points on why you shouldn’t buy gold too! Hypocrisy…? Naah! We’re just presenting each argument for you to analyze!
And after reading both the sides, if you still want to buy gold, then there’s a little bonus section for you too. Just go ahead now.
Top 9 Reasons to Trade Online Gold Trading
1. Diversified Portfolio
One of the most basic rules for trading is investment portfolio diversification. And, at the same time, another rule says that your investments should have an inverse relationship with each other. It is a fantastic way of balancing trading investments.
Gold could be a good (and must) option as it has a positive effect after high inflation. While all the stocks would be crashing due to high inflation, gold would probably save you by mitigating the losses.
If you are a beginner or someone who doesn’t want much risk, then this is the best asset for you. #Balancer
2. Decreasing Supply
Gold prices would continually rise in the long term as its supply is decreasing day-by-day. The basic rule applies here too, more supply, less demand; while less supply, more demand.
The data also reveals that the demand for gold is not going to diminish anytime soon. In fact, with the increasing purchasing power of people day-by-day, the market might accelerate at a higher pace. #Gold trading is a Safe Investment
3. Go Short or Go Long
Long Trade in the stock market means the purchase of an instrument at an agreed-upon price at a specific time. While going short trade means selling an asset at an agreed-upon price at a particular time. Understand this in detail here.
When a person trades in gold, he has the option of both, i.e. going long and short. The problem is most people think in just one direction that is upwards. However, if you believe the gold’s price is going to fall, then you can also go short. #ProblemSolved
4. Leverage Available
Although it is a risky matter, people willing to earn more profits can use this feature. Leveraging involves paying a small fraction of the overall value of a trade. The leverage rate depends upon the broker, commodity, and the account type. It could be anywhere from 2-10%. Gold is one of the assets which come with this fantastic feature. Thus, if short of money anytime, invest in gold. #Pay Less Get More with Gold Trading
5. Strong amid Instability
Do not ever dare to take gold as a side investment. It is evident from the past that during several times of global or national instability, gold has emerged as an astounding player. While prices of most assets fall during times like recession, pandemics, or attacks, gold generally becomes strong. #Powerful Gold
6. Hedge against Inflation
Inflation signifies an increase in the prices of goods and services in the market. The inflation rate is the percentage increase in prices of goods, at which they are rising. High inflation rate reduces the purchasing power of people, and thus, demand decreases in the market.
While most assets in the stock and forex market fall up straight during high inflation, gold tends to go contrary to other instruments, i.e. go up. Its prices increase directly proportional to inflation. Thus, more people get attracted to gold as a good option.
For instance, during the 1980s high inflation, while the best stock commodity gave a return of 12.3%, gold’s return was astounding 130.4%. #WinnerInLosers
7. Protection from Deflation
It is precisely opposite to inflation, i.e. when the prices of the commodities of a nation start to fall, and business operations slow down. During this kind of situation, people chose gold as a safe investment and rather than keeping cash they invest in gold bars and coins.
It is because while the purchasing power of every other asset falls during the depression, gold might be the only instrument whose purchasing power rises. #Gold Trade, Safe Trade
8. Geopolitical Tensions
Gold delivers not only good financial security against crisis but also geopolitical security amid global tensions. That’s why it is also called a “crisis commodity”.
It is because whenever there’s global tension, people shift their money to a safe bet as the market would probably fall. What other can be a good safe bet other than gold! For instance, just recently, when the European Union faced a crisis during BREXIT, gold in response kept moving strongly. #ConfidentAsset
9. Past Records
This beautiful yellow metal is unlike other metals, assets, and instruments. It has a perfect growing record. People believe it as an excellent way to transfer and protect their wealth for decades. Gold nor rusts neither corrodes; in fact, it is easy to transport, could be transformed into any shape by anyone, and yes it shines too.
If you see the chart of gold prices and analyze it, you’ll notice that except 2-3 times, gold has always been on the rise. #CleanPast
So, these were the nine fantastic reasons why you and everybody else should start gold trading. Your work doesn’t just end after going through those reasons, and you need to understand and analyze them carefully.
And yes, you also don’t need to think that gold is the best investment and blindly trust us. There are several other options in the market too. Gold also has some drawbacks lying in it. Have a look at them too and then decide what you need to do.
5 Reasons Why You Shouldn’t Trade gold?
1. Not Investor’s Choice
Most successful investors do not recommend to invest in gold. Every investor has its reasons, but the truth is no successful investors himself will choose gold as his income source.
2. Gambling Game
Many also argue that gold doesn’t have any value. We all are just gambling over metal and making its prices rise. At the same time, they say it could also crash anytime.
3. Low Returns
Yes, it is true that gold has a clean record of keeping its value. However, if you are someone who is looking for some outstanding returns, then probably gold could be the worst choice for you.
4. Under-Performs Portfolio
If we compare the returns over the years of gold and stocks, then it would be like a competition of a dog and a lion. Most investors, including Warren Buffet, say that gold under-performs other assets lying in our investment portfolio. It nullifies their returns by providing comparatively lower gains.
5. No Income
One of the critical arguments people against gold make is it doesn’t provide income. Compared to even a common stock, gold doesn’t get you any interest or dividend.
Even if we keep money in our bank accounts, it would also give us some low-interest returns. Thus, think before you invest.
Now you have both the sides in front of you. The decision is entirely yours; choose gold as an investment only if it fulfils all your needs and requirements. If we analyze the pros and cons, then we would say you should invest a portion of your portfolio to gold. It will keep your investments in a balanced manner.
Yes, it’s also true that for a higher return, gold is not a viable option. For that, you need to look somewhere else, but remember with high yield comes high risk. Any asset providing huge gains would be either too volatile or for a shorter time. Otherwise, everybody would have invested there only.
The decision is yours, choose wisely!
If you have followed our saying and decided to trade gold, then here’s something EXTRA for you. Here, we’ll tell you what options you have (except physical gold) if you want to trade gold. Below is a short & sweet list, have a look!
Ways to Trade Gold
1. Gold Backed Securities
If you want the benefits of solid gold bars and liquidity of the stock market, both at the same time, then it is for you. It is an exchange-traded fund (ETF) and is a financial derivative product, which means you don’t have to own the commodity. Instead, you make speculations.
It has several benefits such as the cost of storage, insurance, making charges, and other fees don’t exist here as you do not have the commodity with you.
2. Gold Mining Stocks
It is investing your money not directly on gold, but gold mining companies. The profits here are unmatchable with any other gold investment.
But, with high profit comes high risk. It is more of a speculative investment which is too volatile. Thus, trade carefully else do not trade!
3. Other Options
Gold options, futures, and mutual funds are some more ways to invest in gold. It is a more complicated option, so, be careful because you’re not trading in physical gold but trading in speculation.
Therefore, do not fall for the emotions like greed and fear here because if you can win massively, you can also lose quickly.
Hence, these were the other options to trade in gold, other than physical gold. Many people prefer solid gold over online gold trading. However, it is much more comfortable, cost-friendly, flexible, and convenient to trade it virtually with a broker.
Here are some final words for you.
Gold has always been a safe bet and is a hedge against inflation, deflation, and many other market volatilities. It would be a rational choice to keep gold in your portfolio to diversify it. It might be a little volatile if you are planning to trade for a short term, but for a more extended period, gold has maintained its value. Thus, if you’re someone willing to earn short term profits, then online gold trading might not be the best choice for you.
And, last but not the least, if you want to learn how you can trade gold effectively, then click here.
Till then, Stay Happy!