What is Gold?
Investors can invest in gold with exchange-traded funds (ETFs), or by buying stock in gold, or investing stock held by miners and associated companies, buying the physical product, or buying the tokenised asset linked to the gold spot price.
Even though gold no longer backs the U.S. dollar, it is still dominant in today's investment culture and remains important to the global economy. Central banks and the International Monetary Fund are responsible for holding almost one-fifth of the world's supply of above-ground gold, with several central banks adding to their present gold reserves. It is historically necessary to diversify a portfolio to include political and economic uncertainty as another reality of our modern economic environment. For this reason, investors typically look at gold as a safe option during times of international political and economic uncertainty.
Ultimately many investors choose gold as a method of diversification, due to commodities general negative correlation with stocks, bonds and real estate. Like silver and other natural resources, Gold is classified as a commodity, as a publicly traded, tangible asset. Tangible assets' prices generally move in the opposite direction from stocks and bonds.
Historical Gold prices
The price chart shows that gold reached its all-time high closing price of $2069.48 on 6th August 2020 and a low of $1270.41 on 2nd of May 2019. This variation represents an almost 63 per cent change over a relatively short period of time.
How to invest in Gold
There are multiple ways to invest in gold. You can buy physical gold. This can be in the form of bullion (bars), jewellery or coins. The disadvantages of this method are that you must store the gold and ensure its security, typically by storing it in a bank which costs money.
You can also purchase mutual or exchange traded funds (EFT). These funds are linked to the price of gold and the administrator of the fund holds the gold on your behalf, and are more liquid than owning the physical gold outright. You can also purchase gold certificates; which represent a certain percentage ownership of a company involved in gold trading or a certain amount of gold itself. You can invest in gold indirectly by purchasing shares in gold mining or royalty and streaming company. These companies benefit from increases in price and are subject to the same risks and volatility as other stocks.
An alternative instrument is the tokenised commodities option offered on the Currency.com leveraged trading platform. The value of tokenised assets are linked to the value of an underlying asset or commodity, and any change to asset's price is reflected in the value of the tokenised asset. Tokenised assets are based on blockchain technology, which is rooted in distributed ledger technology, enabling easier data storage and record keeping. The tokenisation of real tradable assets increases the efficiency of trading by lowering transaction costs and improving execution speed, and the price can be monitored on the gold spot price chart.
You can execute your trading with tokenised assets using the leverage offered by Currency.com. It should be noted that the leverage is quite high since the required margin for tokenised gold is only 0.5 per cent, which transfers to leverage of 1:200. It would mean that when traders plan to buy tokenised gold worth $10,000 they need to have only 0.5 per cent available capital or $50.
Tokenised Gold spot price trading guide
Trading tokenised gold is easy and, in many ways, the process is similar to trading other types of securities. There are a few basic steps:
Step 1: visit the Currency.com trading platform and open an account by completing the two-factor authentication security process.
Step 2: choose how much you want to deposit into your account. It is possible to trade with either crypto or with fiat currency.
Step 3: calculate the value of the position you want to open, or you can calculate the size of the position based on your available capital and the percentage margin. For example, a position of $10,000 would require that you have $50 of available capital when you trade tokenised gold 1 : 200 (0.5%).
Step 4: positions are opened using the same approach in place at other investment platforms - i.e. taking a long position if a gold price increase is anticipated, or shorting if there is an expected decline in the gold price value. The handy gold price chart could be used to monitor price movement.
Step 5: Currency.com links the open the trading positions between its clients and all unpaired buy or sell orders that are hedged with Capital.com, LMAX Digital or, if needed, with Binance, Bitstamp, Kraken, NASDAQ, NYSE and Gain Capital.
Step 6: you may also consider placing a take profits order or initiate a stop loss order.
Trade tokenised Gold with Currency.com
Gold trading at Currency.com tokenised assets exchange has a number of advantages. Tokenised assets are underpinned by robust and immutable blockchain technology. Opening a trade will give you a token that tracks and moves according to the underlying instrument's price.
Trade tokenised gold spot price with a tight market spread, and benefit from maker rebates and competitive taker fees.
Effective risk management
Manage your risks and secure your profits with stop loss and take profit orders and mitigate any losses with negative balance protection.
Instant order execution
Currency.com has a scalable and low latency order management system, which can execute 50 million trades per second. It is a high-growth, crypto platform seamlessly linking the booming world of cryptocurrencies with the world of traditional financial assets. Powered by simple, slick and intuitive technology, the platform is designed to enable investors to securely buy, trade and invest in popular cryptocurrencies using both crypto and fiat currencies.
Depending on the regulatory perimeters in different countries Currency.com offers different products around digital assets. To help investors trade with confidence, the platform is fitted with robust risk management controls, transparent pricing and extensive financial education content.
Currency Com US LLC is registered with the Financial Crimes Enforcement Network as a Money Services Business. Its parent entity, Currency Com Limited is licensed by the Gibraltar Financial Services Commission as a Distributed Ledger Technology (DLT) Provider. The company has offices located in the US, Belarus, Gibraltar and Ukraine.