About Paper Gold

Discussion in 'General Trading & Investing Chat' started by Sikhar, Jan 8, 2010.

  1. Sikhar

    Sikhar New Member

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    anybody can tell me how to trade of gold in share market I here that we called that paper gold how can I buy I have trading account. Please help :)
     
  2. kanna1111

    kanna1111 New Member

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    Try Gold ETFs....

    They will fetch same return as physical gold and one dont carry a risk of theft of physical storage....

    They are as good as MFs, and unit value is pegged with 1 gm / 0.5 gm value of physical gold...
    Unlike MF their value changes very second of a trading day along the market value of gold...
    Reliance Gold ETF,
    Kodak Gold ETF,
    UTI Gold ETF
    SBI Gold ETF
    and Quantum Gold ETF etc are few exist in India..


    hope this helps, Happy trading day


    Sam
     
  3. uncleji

    uncleji New Member

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    can we hold that paper gold for any period (2-3 yrs) after purchasing? Is there any other condition.
     
  4. kanna1111

    kanna1111 New Member

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    Yes,

    You can hold "Paper gold" as long as you wish to hold, provided the custodian (Reliance, UTI or SBI whoes ever issuing Gold ETF) survives, more ever regulators have enogh security from these custodians

    Sam



     
  5. Tractor

    Tractor New Member

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    Lack of any real goods. Gold futures, as with all securities, have zero liquidity outside the markets where trade takes place.
    I prefer buy physical gold but not gold bars. I use gbullion.com and can buy 0,0001 grams of gold.
     
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  6. sanjay_msu

    sanjay_msu New Member

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    Which mutual funds are performing better
     

  7. DanPickUp

    DanPickUp Well-Known Member

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    Hi

    - ETFs are Exchange traded funds. They do not much invest in physical commodity's even when they are gold ETFs. They can be bought and sold on a daily basis in regular and in most of the exchanges around the worlds, depends what kind of ETFs they present. u

    The biggest ETF in the world is the Spider, which present the S&P 500. An other big one is the QQQ which present the NASDAQ.

    ETFs have in general lower cost then other products.

    You have ETFs and you have ETCs which are Exchange traded commodity's funds.

    The problem with ETFs is, that most of normal people do not have a clue how they work and what they do. They can mix derivatives and shares.

    For example : If I own or create an ETF about gold, I will put in goldmine shares and then I will trade on this shares with options. I will put in physical gold and I will borrow any shares, associated with gold by a broker or trust.

    As owner of a certificate of an ETF, you will mostly not get an inside look at this and you surely not get an overlook about all what is done and traded in that ETF.

    Why ? When you buy this certificate, you agree automatically (no excuse when you do not know about, how this funds work and are created), that you accept the way, the ETF is voted by his measurements and managed. This is the risk you take at any time when investing in ETFs.

    If you want to have a deeper inside look in ETFs here it goes : http://www.investopedia.com/articles/mutualfund/05/062705.asp

    To invest in ETFs is surely not a bad idea, but before you do so, try to find out, what is in the ETF, specially when you want to invest bigger sums of money. http://www.investopedia.com/articles/mutualfund/05/060605.asp

    ETFs are an alternative to physical, direct investments in gold or what ever.
    ------------------------------

    - Kanna1111 wrote :

    ""They will fetch same return as physical gold and one don't carry a risk of theft of physical storage....""

    Kanna1111, I know, that it is possible to break in a gold shop or to break in a house. But we talk here about volumes and about serious stuff. As an extreme example : In Fort Knox are 4.500 tonnes of gold with an estimated worth of 180 milliard USD.

    Today, Gold is used for making jewelry, which is about 70 % of the volume every year.

    An other part is stored by central banks for the protection of their currencies like yours in India or elsewhere in the world. It is no more like a decade ago. At those times, many of the central banks had to have always the amount of gold in there hands compare to the amount of there currency.

    An other part is used for the industry and just one percent is used by private investors in direct investment or in ETFs. Even this one % is stored in high security vault.

    The demand for gold is bigger then the production of it. In India, the worst time to buy gold is in October. Why ? This is normally marriage season and every body wants to buy gold for that event and so gold at this time is usually always more expensive than in other months. So, If you plan to marry in October, buy your gold presents in advance.
    --------------------------

    - Tractor writes :

    ""I prefer buy physical gold but not gold bars. I use gbullion.com and can buy 0,0001 grams of gold.""

    You may made a mistake by writing your post. Why not write : One gram !

    When you buy gold in small amounts, then you have to pay much more than the officially fixing price and when you want to sell it, you will get less then the fixing price. The same it is with gold coins. They more represent an individual value or also called : collectible value. If you now go to your bank or somewhere else, it is all over the same. So think twice, before doing such things.

    A better way is to buy at least one kilogram or if you have enough money, go for the „good-delivery-Bars“ (Fineness 995 ‰) with 12,44 kg (400 Unzen) Gold which coast a lot for one peace.
    http://www.goldbarsworldwide.com/PDF/GB_1_Good_Delivery_Bars.pdf

    gbullion.com is not a good place to trade. It is like all this advertising companies, which live from the spread of the mentioned and people should not recommend any newbies such links. Even in Europe, we have in the TV such advertisements from the same kind of companies.

    On the other side : It is a good sing for gold, when they all advertise : We want your gold.
    Why do they advertise like this? Because they think, that gold will lose its value ? Surely not.
    --------------------------

    - If anybody of you want to protect your self in the future against inflation, war, and deflation, you should seriously think to invest in physical gold over the time. Find a product, which invest direct in physical gold, silver, platin and you also can go in to oil.

    Why also in oil ?

    Check the correlation between gold and oil and you got your answer. Gold and Oil many times react contrariness.

    Keep this investment for at least ten years and spend every three month some money in it. Over the years you will have quit some capital with such an investment.

    Any serious product,which invest direct in physical Metal or oil will give you any time asked, an inside view in there positions. ETFs do not and they do not have to do. It is the law, which says, what the different funds are allowed and what they have to do. This is the way, we have here in Europe and I hope for you, that you also have some laws for that kind of products in your country.

    Go once and have a look at a ten year chart of gold, silver, platin and make a deeper search about the use of this metals. Latest then you should recognize the value of this investment.
    ----------------------------------

    - If you are more speculative and familiar with futures, the best investment is a gold future. You can move with little money a bigger amount.

    If you go in to futures, be careful and learn first about what a future is and learn about MM and RRR. Put in only max 2 - 5 % of your not needed money in that and work always with a stop/loss. Take your time, even to an extended level, to learn about that derivatives before jumping in !!

    http://www.cmegroup.com/trading/metals/files/MT-023_NewMetals_WhitePaper_SR.pdf

    By the way: If you own physically gold, you may can use that for the margin to trade the gold future. Clear it with your broker. He may even agrees to that when you want to trade shares, means you want to sell them with even owning them, from gold mining companies. Not for beginners

    If you only go for shares with a buy and hold strategy, choose wisely. But this you know by your self.

    Take care and have a nice weekend.

    DanPickUp
     
    Last edited: Aug 2, 2010
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