Recently, the gold market has continued to find new record levels on a regular basis, nevertheless, for the time being, the market appears to be struggling.
We have seen many pull backs of this nature in the past, however the metal has eventually continued on its rise. The gold bull run is now into its ninth year. Trying to call an end to the metal?s relentless rise has been a fruitless task for a very long time indeed.
However, it must be remembered that back in 2008 the gold market fell almost 30% from its highs before recovering, so reversals can be very nasty indeed.
If you?re your looking to invest in the gold market, one opportunity that is certainly worth considering is spread betting. This form of investment offers a range of benefits over other forms of trading such as the speed at which you can trade, the number of markets available and, quite simply, the ease at which you can open and close trades.
As with any other form of investment, however, such as buying a house, trading stocks or simply having a pension, spread betting does have a negative side.
If you spread bet, you can actually lose more than you initially invested. So why would you consider it as part of your trading and investment strategy?
Spread betting may not be the be-all-and-end-all of trading, but it has a number of advantages. For a start, spread betting offers a solution that covers tax free* trading and quick access to global markets.
The reason why spread betting is tax free is because you are not actually buying or selling any assets, nor are you buying or selling the rights to any stocks or shares. You are purely speculating on the future value of a financial market. As a result, spread bets are not subject to capital gains, stamp duty or income tax*.
Furthermore, the quick access to thousands of worldwide financial markets is a key feature. You can speculate on gold but you can also trade the level of a stock market like the DAX 30 or FTSE 100, foreign exchange markets such as the Euro/Yen pair, and, naturally, you can spread bet on shares. You can even speculate on the price of commodities such as Sugar and Platinum.
Also, unlike traditional share trading, you can sell a market; financial spread betting lets you trade in both directions. If your research leads you to think that the price of gold will decrease, you can speculate on it to go down. If you think that the price of the yellow metal will increase, you can spread bet on it to go up.
Financially, as discussed, investing does have its risks. Nevertheless, there are things you can do in order to reduce the potential drawbacks. Adding a Guaranteed Stop Loss Order to your spread bet helps to reduce your risks. If you start to lose on a trade, and the market reaches your pre-determined Stop Loss level, then your order will close the trade and you won?t lose any more capital.
So, whilst there are many positives, you must also understand the potential disadvantages. Financial spread betting carries a high level of risk so you should only speculate with money you can afford to lose.
It is important that, before trading, you ensure that spread betting matches your investment needs, you should familiarise yourself with the risks involved and, where necessary, seek independent advice.
* Based on UK tax law. If you pay tax in another jurisdiction then tax law may vary.
Source: http://roamet.org/investing-in-the-gold-market/
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