Gold: The leading precious metal
In this article, we won't talk about investing in gold by buying a gold bar from Fort Knox or from a local gold mine. Specifically, we will discuss trading with an online broker offering instruments with this precious metal as their primary reference.
In general terms, investment professionals use financial instruments related to gold and shares of gold miners to diversify and complete an investment portfolio. In other words, gold diversifies an investment portfolio because, historically, it has acted as a store of value. What does this mean? When the economy goes bearish (downturns), most financial assets tend to go down, yet gold increases. We say "tends" because in extreme cases where everything drops recklessly, gold also does, although these situations are exceptional. It is also important to emphasize that it is probably the first financial instrument to settle back at a higher price in these situations. Historically, gold has maintained its value against inflation (The current worry in the global economy). In real terms, gold allows intertemporal savings (You save value today and enjoy the same amount of it in the next period, which inflation erodes). And this means? That gold tends to keep a stable value compared to other materials; in other words, it has had a price and has been desired and treasured since the dawn of history.
Which Financial Instruments are related to gold?
There are four ways to invest in gold-related instruments:
Physical Gold: You would have to go to a bank and buy a golden coin, a golden bar, or gold bullions. It is an expensive option since spreads are usually huge (The difference between buying and selling prices).
Derivatives on the price of refined metal: Derivatives are an excellent option for all types of traders since they allow trading on gold prices. They have meagre initial capital requirements. However, you never own the physical raw material; you speculate on its price. If you wish to trade gold, this would be your primary option. If you desire to save in gold, go back to the physical material.
Stocks: The next option is to trade securities of companies directly or indirectly related to gold mining. For example, you may buy Goldcorp, Barrick Gold or Newmont Mining shares, three of the top gold miners trading on a stock exchange (You will find most of these companies trading in New York, London, South Africa and Australia).
CFDs on ETFs: Another option is to trade exchange-traded funds or ETFs that track gold prices and companies involved in gold-related activities, like mining, intermediation, or even jewellery producers. There is an infinity of possibilities to invest in gold-related ETFs. Among others, we could name the SPDR Gold Trust (GLD), which invests in physical gold, or the VanEck Gold Miners ETF, which invests in companies that extract the mineral. These are only two options, but an endless list of providers and investment portfolios is available.
Brokers like AvaTrade have Online Apps that allow you to trade Gold Financial Assets in a straightforward way
Online Brokers - Your pathway to Gold Assets
As the reader of this article probably already knows, CFD means a contract for difference; that is, it is a financial instrument that allows you to trade changes in the price of futures and options, but without the need to handle contracts. For example, a CFD on Gold follows, directly related to the metal's spot price, without the need to trade physical gold bars. It is then an efficient way to invest in gold if you want to trade the rise and fall of the price of this raw material and not save it on the metal itself, which is costly and requires a higher initial investment. Not to mention, it may be unsafe to keep gold bullions at home.
Online Brokers platforms allow you to invest in Gold-related financial instruments straightforwardly through optimized applications that facilitate financial market access. Most apps resemble a social network or any other application on a mobile device. They are designed so that the investor can learn and start trading quickly without needing prior trading experience (Disclaimer: You need to be knowledgeable since investing is inherently risky). Note the picture above that shows one of Uganda's most popular trading platforms.
And how do I invest Online in Gold-related assets?
To buy an asset with exposure to gold [or any other commodity or stock at the Stock Market], you literally must:
Choose a Broker who is available in Uganda (Not all of them are). The alternatives presented before are available to local residents.
Depending on the Broker, accounts may be opened in US Dollars (USD), Euros (EUR), Pound Sterling (GBP), Swiss Franc (CHF), and Australian Dollar (AUD) as the base currency. Most offer the option to open the accounts in either Dollars or Euros.
Open an account with the Broker; it usually requires you to upload a copy of your National ID Card and a proof of address through their app or email.
Search for "Gold" or "Gold" on the Broker's platform, choose the financial instrument to be traded, and
Press the "Buy" button.
And officially, you have invested in financial assets related to gold.
What's the minimum amount to Invest in Gold-related financial instruments from Uganda?
Many Brokers do not have a minimum deposit (or a meagre amount of money). Many others do not charge a commission for the purchase and sale of Commodity. So, you do not need to be an investment banker to start trading gold-related assets.
Best Brokers to Trade Gold Assets available in Uganda
Uganda has announced that it has discovered 31 million tonnes of gold with an estimated 320,000 tonnes of recoverable pure gold. Value storage, historical currency and precious metal: gold has been an object of veneration and coveted throughout history. This article will shed light on how to start investing in gold from Uganda.
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