You need to understand how to trade gold for you to enjoy its liquidity, ease of trading, and diversification. Gold holds monetary value for long periods of time, and this feature makes it a safe space for commodity traders. Grasp the details of how to trade and when to trade before you start to trade gold.
How and why trade gold?
It is easy to start trading gold. You commence by registering with your preferred broker. Ensure your profile information is accurate and complete. The next step is to fund your account. The funding allows you to access available asset classes. These two steps will enable you to start trading.
Kindly trade gold to enjoy the benefits of diversified long-term investments. Gold has a timeless appeal making it a haven for Nigerian investors. Gold can be a reliable tool used to manage trading risks. Additionally, you can store gold value in real terms during economic turmoil. Investors have a hedge against increasing inflation. You will also enjoy international liquidity pegged on the fact that gold is traded globally.
What affects gold prices?
Many factors affect the perceived value of gold. The determinants go beyond the numerous uses of gold and the prevailing economic issues. The first thing that dictates gold pricing is supply and demand. An increment in gold demand leads to an increment in gold prices. On the other hand, a decline in demand leads to a reduction in global prices.
The United States of America dollar value is another price determinant. Gold is mostly traded in US Dollars. This phenomenon has made it have an inverse relation to the dollar value. Additionally, the value of US government treasury yields affects how you trade gold. Gold is a non-yielding investment making it have an inverse relation with corporate and government yields. When the yields rise, the price falls. If the yields fall, gold prices rise.
Seasonality and inflation also affect global gold prices. Early July or late June is a second quarter that experiences low demand and low prices. We have a demand search in the third quarter, and the peak is at the end of the year and the new year. On the other hand, inflation has a bearing on the amount investors part with to acquire a particular quantity of gold. When inflation rises, the prices skyrocket, and a fall in inflation leads to low gold prices.
Industrial demand is the last thing that affects how you trade gold in Nigeria. Gold is used in various industrial activities. Technological advancements also depend heavily on gold. High demand for electronics increases gold demand. The same thing happens when there is a jewelry demand increment.
How do you invest in gold in Nigeria?
You have several ways to invest in gold and be part of the current gold trading buzz taking over Nigeria. Please select a trading option that suits your investment needs and strategies. You can invest in physical gold by buying gold bars, bullion, jewelry, and coins. The next step is to keep your investment in a safe place. This reserve is sold when the prices are lucrative. On the other hand, you can buy stocks in gold mining entities, invest in Gold Exchange Traded Funds (ETFs), and gold spot contracts.
Gold futures and spot
Some contracts enable Nigerian traders to exchange a fixed gold quantity and quality for a fixed price on a particular future date. These contracts are gold futures and spots. You have a cash or physical settlement when the deal is closed. On the other hand, you can buy or sell your gold at the current market price using spot contracts. Spot trading is a mechanism that can allow you to engage in gold trading without owning physical gold.
Gold jewels and bullion
You can store your investment safely in Nigeria by buying gold coins, bars, jewelry, and bullion. Kindly only buy gold from reputable gold dealers. Please consider the safety of this precious metal and ensure the dealer is insured. The costs incurred to store and the insurance cost will affect your gains from the gold trade. Moreover, gold coins and jewelry need a keen eye to avoid items in bad condition or inauthentic.
Gold mining stocks
Gold mining is a common practice across the world. Canada, Russia, the USA, Australia, and China are among the leading gold miners. We have profitable gold mining companies in these nations and even within Africa. You can buy their stocks and earn returns as they mine this precious metal.
Gold EFTs
Gold Exchange Traded Funds (ETFs) are an alternative gold investment strategy. This trading option is a safe way of diversifying your investments in Nigeria. It is easy to trade Gold Exchange Traded Funds (ETFs), has admirable diversification, and you will enjoy unmatched liquidity.
This investment alternative is becoming popular in Nigeria because of its ease of trading and diversification compared to bonds and stocks. Additionally, you avoid the costs incurred when buying physical gold; they include insurance and storage.
It is worth noting that this trading attracts some risks. Counterparty risk is one of the reasons you are likely to incur a loss. There are also management fees that affect your returns. Lastly, the EFTs field is very volatile, and this reality increases the chances of you losing part of your investment.
What trading platform should you use to trade gold?
Another critical issue to consider before venturing into gold trading in Nigeria is the trading platform. Kindly go for powerful and popular trading platforms. This consideration will help you to trade from anywhere and at any time. Pick an entity that supports trading on any device and in your preferred style. Your investment deserves a safe platform. You do not need to wake up one day and find that your investment has vanished because you trusted a broker with an unsafe trading platform.
