How to Start Investing in Gold in 2024
The geopolitical events over the past year have caused a huge surge in interest in learning how to invest in gold. The yellow metal is seen as a safe haven in tough economic times with investors ranging from individual speculators to central banks and hedge fund managers.
If you're interested in learning how to start investing in gold then you are in the right place! In this article, we go through how to buy gold UK, answer the question 'is gold worth investing in?' and how to start investing in gold in a step by step process.
Table of Contents
How to Buy Gold in 4 Steps
With Admiral Markets, you can buy gold commission-free with only spreads and swaps payable depending on which account you use. Here’s a step by step process on how to buy gold from the Admiral Markets Trade.MT5 account. This account allows you to speculate on the price direction of gold using CFDs (contracts for difference). This product allows you to trade gold both long and short meaning you can potentially profit from rising and falling gold bullion prices.
- Step 1: Open an account with Admiral Markets to access the Dashboard.
- Step 2: Click on Trade on one of your live accounts to open the web platform.
- Step 3: Search for Gold at the bottom of the Market Watch window and drag the symbol onto the chart.
- Step 4: Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Do You Prefer to Invest in Gold
If you prefer to invest in gold and want to try and capitalise on the performance of gold prices then you can do so with Admiral Markets too!
The Admiral Markets Wallet Gold Account allows you to receive the performance of gold with zero holding costs.
All you need to do is transfer your investment capital (US dollars, euros, British pounds, etc), to the gold account from the Admiral Markets Dashboard and then convert it back whenever you are ready.
Is Investing in Gold a Good Idea?
A common question among beginner traders is whether investing in gold is a good idea. In fact, nowadays, with so much news around gold, most people are asking the question of whether investing in physical gold, such as gold bars and bullion is better than gold futures investing or gold spot investing.
The answer to these questions will differ for every individual as it depends on what your overall outcome is and the fact there are many different pros and cons of investing in gold. This is because gold is used as an asset for many different types of investors which have very different styles. Let’s take a look at a few examples in the next section.
3 Gold Investing Strategies
There are a variety of ways to invest in gold. It's important to identify your purpose behind investing in gold so you can choose the right trading strategies and tools. For example, some may choose to buy gold for the short term and speculate on price direction like day trading. Some may choose to invest in gold in the long term to hedge against a declining stock portfolio. Below is more detail on the different investing in gold trading strategies you can use.
1. Long-Term Gold Investing Strategies
Gold is often used by long-term investors to balance out an investment portfolio. For example, many fund managers would have a certain allocation to stocks, bonds and metals like gold. The theory behind this is asset diversification.
When one asset isn’t performing well, maybe another asset is. Of course, when it comes to gold price investing, patience is key as, historically, gold has less volatility than the stock market which exhibits more growth-based characteristics.
However, for long-term investing there can be issues when investing in gold bars or investing in gold bullion because of storage costs and insurance costs. When deciding how much gold is a good investment, it can be challenging as gold bullion bars come in fixed sizes which can be quite expensive.
This is why some investors managing a pension portfolio or trying gold IRA investing (Individual Retirement Account), may choose to focus on gold mining stocks or gold ETFs (exchange traded funds). An ETF is a fund that invests in a basket of securities with an aim to track a certain market, region or sector.
The monthly chart above shows the historical price activity of the SPDR (Standard and Poor’s Depositary Receipt) Gold Shares ETF. The SPDR ETFs are a diverse range of different funds that were created and are managed by asset management company State Street Global Advisors.
The prospectus of the SPDR Gold Shares ETF, states that its main objective is to “reflect the performance of the price of gold bullion.” It was the first-ever US-traded gold ETF and was the first ETF listed on a US exchange that is backed by a physical asset - in this case, gold bullion.
2. Short-Term Gold Trading Strategies
Some individuals may choose to buy gold by trading the spot price and holding for shorter-term periods. The spot price is the price that which gold is currently trading. Short-term traders would typically speculate on the price of gold moving up or down which can be done in a variety of ways, such as gold futures investing.
A futures contract is one of the oldest forms of trading as it was originally designed to help facilitate commercial transactions. Essentially, a futures contract is simply an agreement to buy, or take delivery of a certain commodity at a certain fixed date in the future.
Gold futures contracts are traded through the Chicago Mercantile Exchange (CME) and are used extensively by larger institutions. As futures contracts expire at certain dates, they are used widely by short-term traders such as day traders and swing traders for live gold price investing.
With Admiral Markets, you can trade different futures markets via Contracts for Difference (CFDs). This enables you to trade long and short and potentially profit from rising and falling markets. You can also trade using leverage which means you can control a larger position with a small deposit which has its own benefits and risks.
The chart above shows the price of Gold CFDs which is available to trade via Admiral Markets. This is effectively the price of Gold vs the US Dollar CFD. When trading via CFDs, traders would enter a long or buy position if they believe the market will rise, or enter a short or sell position if they believe the market will fall.
With a Gold CFD you are merely speculating on the price direction of the market, so you never actually own the underlying asset. For shorter-term day traders who hold their trades for minutes or hours, the speed of entering and exiting the market is essential.
3. Gold Hedging Strategies
Gold is often used as a hedging strategy by larger fund managers. Hedging strategies are used to help offset the losses in an investment portfolio. But there are a variety of ways investors use gold to hedge. Let’s take a look at a few!
Investing in Gold as a Safe Haven
During times of economic uncertainty, or a stock market crash, many investors prefer to move their capital to gold. This is because the metal is considered a haven asset class due to its store of value - it is liquid enough to trade but has a finite supply to make it valuable. Legendary investor, Warren Buffett famously quoted that “gold is a way of going long on fear.”
At the beginning of 2022, the price of gold surged higher when Russia invaded Ukraine. This caused risk assets such as commodity currencies and stocks to decline with the capital moving into safe havens such as gold. The price surged higher to within a few points of a new record high.
Investing in Gold and Inflation
Gold is often used as an inflation hedge. This is where a commodity, or security, such as gold, is anticipated to protect against the decreased purchasing power of a currency that arises inflation. In a period of inflation, prices of goods and services generally rise which means each unit of currency will buy you fewer goods and services.
For example, if the US dollar falls because of inflation it means that the price of gold (in US dollars) would become more expensive. Therefore, investors tend to flock towards gold during times of inflation, as they could be rewarded by higher prices in the metal, thus acting as an inflation hedge.
When to Start Investing in Gold?
One of the challenges for many investors - short term and longer term - is knowing when the best time to buy gold is. While there may be a fundamental narrative to support trading old (such as inflation or safe haven flows), the timing of the trade can be more difficult.
This is where cutting edge tools such as the Technical Insight Lookup indicator provided by Admiral Markets become very useful. This indicator provides actionable insights and trading ideas across thousands of different markets including gold, gold mining stocks and gold ETFs!
The screenshot above shows a search for the commodity GOLD. The Technical Insight Lookup indicator has reported it has found 20 different technical events that are happening on the current price of gold. This is categorised into short-term, intermediate-term and long-term.
The technical events represent key developments within certain technical trading indicators and price action. For example, the screenshot above shows the technical indicator has found events such as a gap down, a moving average cross, a cross of the stochastic, a bearish flag pattern and many more.
What’s even more interesting is the fact it provides a detailed explanation of what the technical event is and why it is important. This is a great tool to help learn more about the different technical indicators and how traders use them to make decisions. There is also a picture so you can visually see the technical event taking place.
Access this analytical tool today by clicking on the banner below.
Why Start Investing in Gold with Admiral Markets?
- Invest with a well-established company authorised and regulated by the UK Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC), the Jordan Securities Commission (JSC) and other well-known financial regulators.
- Open an Invest.MT5 investing account to buy stocks, shares and ETFs from 15 of the largest stock exchanges in the world and collect dividend payouts all from the MetaTrader 5 trading platform!
- Open a Trade.MT5 trading account to access more than 3,000+ financial CFDs to potentially profit from rising and falling markets across stocks, ETFs, indices, commodities, currencies and more!
- Open an Admiral Markets Gold Wallet to receive the performance of gold prices without any storage costs.
- Receive access to game-changing analytical tools such as the Technical Insight Lookup Indicator from the Premium Analytics section.
Did you know that you can get started today with a FREE demo trading account? This account allows you to test all of the services and features provided by Admiral Markets in a virtual environment. This helps to build the skills and confidence to eventually move to a live account.
Get started today with a free demo account by clicking on the banner below:
Continue Reading:
- Best Gold Mining Stocks
- How to Trade ETFs with €1000
- The CFD Trading Guide
- How to Trade Commodities Guide
About Admiral Markets
Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering online trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets’ investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
- With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Marketss has established relevant internal procedures for prevention and management of conflicts of interest.
- The Analysis is prepared by an independent analyst, Jitan Solanki (analyst), (hereinafter “Author”) based on their personal estimations.
- Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
- Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
