How to Trade Gold


Spread Betting

Spread betting can be a great way to get leveraged positions on gold or on individual gold stocks.  There are many spread betting companies which offer bets on gold as well as other metals and commodities and shares in gold companies amongst many others.  A spread bet gives you a buy (the offer price) and a sell (the bid price) – the gap between is called the spread.  You can do daily bets that are rolled over to the next day for a small charge, if required, or you can do a future bet which would usually expire sometime in the future, the price can vary depending upon the long term prospect for the specific share or commodity

Spread betting is free from capital gains tax as you never actually own the share or commodity you are buying, you are merely betting that the price will rise or fall sometime in the future and you are hoping to win the difference between the price at which you purchased and the price that you eventually sold at.  You can bet that an instrument will go down (called going short) or will go up (called going long).

The spreads can sometimes be high, so you need to be aware that this could be a risk if trying to bet on a short term movement.  The more liquid a share or commodity the tighter the spread usually is.  You would also be wise to incorporate a stop loss when you make your bet as if the market turns badly against you your position gets closed before you lose too much.  You can also put a limit order on which will close your position when you reach a predetermined profit level.


There are also many companies which allow you to buy and sell shares online and monitor all your positions from one account.  You can get dividends in the normal way as if you held the share certificate yourself.  The accounts are technically called nominee accounts, where you effectively nominate the company to hold the share certificates on your behalf electronically which means that you can trade in and out instantly (subject to market conditions).

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