1. About Gold Spread Betting
When it comes to spread betting, Gold is the most traded metal and one of the most traded commodities.
Historically, gold has been seen as a lower risk investment because the precious metal is thought to hold its value, even during uncertain economic times. In fact, gold was used for many years as the main base currency when trading other commodities for precisely this reason.
Many traders prefer to take money out of what are typically thought to be riskier markets, such as forex pairs or equities, and re-invest in gold when markets are more volatile.
Even in times of relative stability, gold trading continues to play a significant role in many portfolios and this may often take the form of a spread bet.
Spread betting can be a useful tool for an investor who is considering trading on gold. It allows tax free*, leveraged trades. You can also take a long or a short position, ie speculate on the price of gold to go up or down. However, whilst the leverage can allow for larger profits, it can also lead to losses in excess of your initial stake size. Gold spread betting should only be attempted after proper research and, where necessary, an investor should seek professional advice.
Despite the historical viewpoint there are still differing opinions on gold:
- Gold is considered to be a long-term hedge against inflation. That has been empirically justified by research conducted by the World Gold Council in June 2006.
- Simon Denham of Capital Spreads is not a fan, “In the end Gold is just a pretty, useless, yellow lump of metal. Too valuable to actually use for anything and costly to own. In times of trouble it has safe haven value but in good (or even just slightly bad) times, it is of little worth as a long term investment”.
Whatever your point of view, gold can be an interesting market to trade and it sees some impressive price movements
- In 2007 it started trading around $605 before ending the year at $898 per ounce
- In March 2008, the precious metal traded as high as $1028. Later in the year Gold was seen down at $681
- In February 2009, Gold again broke through the $1,000 mark to trade as high as $1,006 per ounce. The metal then dropped to $864 in April 2009.
- In 2009, on a given day, the price of gold can easily swing by $10-20
2. Where can I Financial Spread Bet on Gold?
The above spread betting markets may also be available with other companies. Also see Comparison Table Notes.
3. How to Spread Bet on Gold
As with many financial markets, you can spread bet on the future value of commodities.
When you spread bet on Gold, you trade in £x per point, where a point is $0.1 of Gold movement. For example, if you staked £5 per point and Gold moves $1.2 then that would be a £60 difference to your profit / loss.
£5 per point x $1.2 = £5 per point x 12 points = £60.
So let's say you see the live price on FinancialSpreads.com and they are currently quoting their Gold (August) market at $886.1 - $886.9. And let’s also assume that you have done your homework and think that Gold will close above the $886.9 mark:
- You have done your analysis and think that the Gold price will close above $886.9
- You decide you want to go long (buy) of the market. You risk £2 per point
- The market increases. You decide to let your bet run to the expiry date, 28-Jul-08
- So let’s say the August Gold market closes up at $895.8
- You bought the spread at $886.9
- Profits = (closing price - opening price) x stake
= (($895.8 - $886.9) / $0.1) x £2 per point stake
= ($8.9 / $0.1) x £2 per point stake
= 89 points x £2 per point stake
- Profit = £178
Trading does not always go to plan and the Gold markets can be volatile at times. Had the Gold market gone down and settled lower at $878.5, then you would have lost on this spread bet:
- You bought the spread at $886.9
- Profits = (closing price - opening price) x stake
= (($878.5 - $886.9) / $0.1) x £2 per point stake
= (-$8.4 / $0.1) x £2 per point stake
= -84 points x £2 per point stake
- Loss = -£168
(Prices quoted as of 22-Oct-08).
Gold Spread Betting Notes:
- You can spread bet on Gold for as little as £1 per point or €1 per point with Tradefair Spreads, Spreadex, FinancialSpreads.com
- Because Gold is priced in US$ then the price of gold will often go up when the US Dollar depreciates and vice versa, the price of gold will go down when the US$ strengthens
4. Where can I find Real-Time Gold Spread Betting Prices?
All of the above companies provide access to real-time indices prices to their account holders.
Note that you may need to log into your account in order to see the live Gold prices.
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No Fees, No Commissions, Spread Bet on Shares, Indices, Forex, Commodities Apply Now.
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5. Where can I find Gold Candlestick Charts?
A number of the spread betting companies offer a variety of charts, including candlestick charts. Note that you may need to open an account with the respective company in order to see the charts and/or have full access to real-time charts that you can manipulate. Spread betting accounts are subject to status, terms and conditions.
Candlestick charts are currently available with:
Charts may also be available from other spread betting companies.
Example commodities charts from Financial Spreads:
Above - Gold 10 Minute Chart
Below - Gold 1 Hour Chart
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www.FinancialSpreads.com Narrow Spreads, Free Charts and Live Prices.
No Fees, No Commissions, Spread Bet on Shares, Indices, Forex, Commodities Apply Now.
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"Gold Spread Bet" last update by RThomas, 11-Mar-2010
Warning: Financial spread betting carries a high level of risk. You can lose more than your initial investment or stake. Financial spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.
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