How to trade gold: Instruction for beginners (Part 2)

How to choose a market to trade the gold

How to start earning from gold trading? First of all, it is necessary to understand that there are different markets and correspondingly - opportunities for income. ETFs, CFDs, physical metals, futures, and gold stocks are the most popular options. Each of them has its pros and cons.

Gold-based ETFs

Gold-based ETFs are investment funds where gold is the main asset. This means that when you buy such ETFs, you are investing in gold. This type of asset can be traded on many stock exchanges.

Some of the most popular gold ETFs include:

-VanEck Vectors Gold Miners ETF (GDX);
-SPDR (GLD);
-Market Vectors ETF Junior Gold Miners (GDXJ);
-Shares Gold Trust (IAU), etc.

Pros:
1. Low Transaction Costs
Gold-based ETFs can be traded the same way as stocks. Financial transactions are accompanied by low transaction costs and no other commissions.

2. Liquidity
Gold ETFs are traded on major exchanges where prices are generally stable. You won't lose money buying and selling such assets.

3. Diversification
Using a gold ETF is an opportunity to diversify your portfolio. It is an opportunity to access the gold market without investing in a physical asset.

4. Tax benefits
Another interesting point: gold ETFs provide certain tax benefits. Even if you sold these assets at a loss, you can use that loss to reduce your tax burden.

5. Permanent access.
You can sell a gold ETF whenever you want. You don't have to wait until the trading session is over.

Cons:
1. Small selection
Gold ETFs are a relatively new investment tool, so there is a small selection of funds.

2. Management fees are high
Gold ETFs are usually accompanied by high management fees. This has a negative impact on profits.

3. Lack of control
When you invest in a gold ETF, you are entrusting control of your assets to a fund manager. You can't get your own money back when you want it.

4. Risks of investing
Gold ETFs are a risky investment. The value of gold can both rise and fall, and this will affect the value of the ETF.
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