There are many options for gold investments. The question of whether it is possible to leverage a gold investment is also a valid one. Let me explain.
The majority of types of gold investments are not leveraged. These include physical bullion and gold certificates
There are 2 ways to leverage your investment. These are the 2 ways to leverage your investment.
Forex
You would trade gold in this case as a currency pair. You could trade it against the US dollar or Japanese Yen, Swiss Franc, and many other currencies. This has the advantage of amplifying your gains, not only from the appreciation in gold but also from the depreciation or the other currency.
Making a profit from both ends
If gold is in an uptrend, then buying gold investments will make you money because of the rising price. If you are aware that a country is experiencing a unique crisis, it would make sense to bet against that currency in order to profit from the fall in its value. If you’re betting against the japanese currency, you could bet long on XAUJPY. You would make a bigger profit if you were able to profit from both the rising gold price as well as the falling japanese currency.
Is it possible for a gold investment to be leveraged
CFDs, or contracts for differences, are used to trade these currency pairs. This type of trading is high-stakes and carries high risk. The majority of platforms report losses of over 70% of account holders. This is a good option for experienced traders.
Once you are skilled in trading, you can earn more than buying gold.
For gold currency pairs, the margin requirement is typically 20%. This means that you will need to put up $200 to start a trade for every $1000 worth of gold currency pairs. There is also a maintenance margin. If your funds are lower than the maintenance margin, this is an additional buffer. Different platforms use different maintenance levels and different formulas.
This is why you need to have experience, especially in emotions and discipline when managing your trades and margins.
Before you open a trade, make sure you are aware of the maintenance margin requirements for your account. These are important for trading success. Many traders have lost their accounts due to a few bad trades.
FXTM is a website that allows you to open a trading account if you don’t have one. You can learn a lot about trading strategies by watching their webinars.
Margin Account for Buying Gold Etf and Gold Mining Companies
You can leverage buy the actual asset, as well as trade CFDs using leverage. Margin accounts are available at many brokerages. You can buy equity from gold mining companies or etfs on margin. For this purpose, Poems (phillips security) is what I use in Singapore.
For my short- to medium-term equity positions, however, I prefer poems. For gold investments, I prefer to keep physical long-term. I prefer to trade forex pairs with gold for the short-term.