Spread Trading on the Gold Markets
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Spread Trading on the Gold Markets

Spread Trading on the Gold Markets

The gold market is constantly hitting new highs. Yes after hitting the next high it may drop as much as $75 or even $100 but the metal soon finds its way again and looks to new highs.

No doubt the world will continue to buy gold but investors should beware the talk that it can only move in one direction.

There is a Sovereign Debt crisis surrounding Europe and not surprisingly investors are moving their funds out of risky asset and into ‘quality’. This flight-to-quality in the Government bond markets has seen the German Bund reaching new all time highs. UK Gilts and US Treasuries are also experiencing massive rallies.

As Simon Denham of paddypowertrader commented, “Normally a flight-to-quality move by investors also boosts the gold futures market. During the Sovereign Debt crisis, bonds have done well but this has not translated into a flight to Gold as well”.

All good investment websites and articles will tell you that when speculating on the financial markets you need to understand that there are risks. Whether you are spread trading, using ETFs or simply trading shares, you can lose money.

But what options are there for those wanting a convenient, flexible investment option which also provides access to thousands of international markets as well as certain tax advantages*? For many UK, European and Australian investors the solution is financial spread trading.

As we have just seen, the risks are always something to bear in mind and before we proceed it should be pointed out that with spread trading and you can lose more than your initial stake.

There are a couple of other pointers which the following warning suggests you consider, ‘Spread trading carries a high level of risk. Ensure that spread trading matches your investment objectives. Make sure you familiarise yourself with the risks. Where necessary, seek independent advice’.

Nevertheless, the simple range of markets makes spread trading an investment option that is worth considering. Most spread trading companies offer thousands of international markets including shares, stock market indices, oil and even minor currency exchange rates. Naturally you can also spread trade on gold.

There is wide range of benefits with financial spread trading including a variety of risk management tools. Other benefits include the fact that you are opening positions directly with spread trading companies, this means that you don’t pay broker’s fees.

Also, unlike traditional share trading, you are able to sell a market. Financial spread trading offers you the option of trading in either direction. As a result, if you think that Gold will go up, you can speculate on it to increase. Conversely, if your research makes you think that the price of gold will weaken then you can speculate on it to fall.

Finally, don’t forget the tax free advantage. You do not buy or sell any actual assets or rights; instead you are just spread trading on the future value of a market. Spread trading is not liable to stamp duty, capital gains or income tax (based on current UK and Irish tax law*).



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Risk Warning: CFD trading and spread trading carry a high level of risk to your capital and you may lose more than your initial investment. CFD trading and spread trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

'Spread Trading on the Gold Markets' by DB, updated 01-Sep-10

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Risk Warning: CFD trading and spread trading carry a high level of risk to your capital and you may lose more than your initial investment. CFD trading and spread trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The contents on CleanFinancial.com are for information purposes only and are not intended as a recommendation to trade. Nothing on this website should be construed as investment advice.

Neither CleanFinancial.com nor any contributing company/author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.


* Tax law is subject to change or may differ if you pay tax in a jurisdiction other than the UK.

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