How to Buy Gold Futures

Gold has been the number one choice for investing because of it's stability and because it has so many different uses. Gold can be traded, made into exquisite jewelry, used in the circuit board of [[cell phones] and made into gold coins. Because gold is in such high demand and because of the state of the economy, the prices are getting higher every year and making an investment in gold futures trading can bring you a hefty return.http://goldprice.org/buying-gold/2007/07/gold-futures-trading.html

Investing in gold futures can be very rewarding if you know what you are doing. There is a lot of advice that tells you how to buy gold futures. If you want to invest your money where it will give you an impressive return, you should learn how to buy gold futures. This is a high-risk investment. If you are squeamish about the possibility of taking a loss, you may want to put your money in a low-risk investment.http://goldprice.org/buying-gold/2007/07/gold-futures-trading.html

The rise in gold prices is due, in part, to the crisis we are facing in the economy. People everywhere are looking to make money in a way that is immune to the bleak economic forecast.http://goldprice.org/buying-gold/2007/07/gold-futures-trading.html

What is a gold future? - Gold futures are a commodity that is bought and sold on the stock market. A gold future is a contract that states that you will buy gold on a specific date (in the future) at a price that is specified in the contract. When you buy your futures at the price you pay today, you are expecting the price in the future will be higher than the price you paid. If the prices are higher, you will make a profit. If gold prices are lower than the price quoted on the futures contract, you will lose money.http://goldprice.org/buying-gold/2007/07/gold-futures-trading.html

Step 1: How Are You Going To Buy Your Futures?

There are two ways to invest your money when you are ready to buy gold futures. You can use the money you have on hand and buy according to that amount or you can buy on margin.

Futures - When you want to buy gold (at a date set six months in the future), you buy it with the money you have available. If you have $2,000.00 and you buy your gold at $1,000.00 an ounce, this will give you two ounces of gold. If, at the end of those six months, the price of gold has risen to $1,500.00 an ounce, you will make a profit of $1,000.00.

On Margin - This is more risky, but the return can be much greater. The amount of money required to buy on margin is anywhere from 2% up to 20% of the actual amount of gold futures that you want to purchase, but the average amount needed to put forth is 5%. If you invest the $2,000.00 to buy 40 ounces of gold (that is worth $40,000.00) and the price of gold increases from $2,000.00 to $2,500.00 an ounce, you will make a clean profit of $20,000.00, with an initial investment of only $2,000.00.

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After you decide how you are going to invest your money, contact an investment broker to handle all of the necessary paperwork involved.

Step 2: Do Some Research

Before you do any actual investing, you need to do your homework so that you are familiar with the actual process of buying gold futures. http://www.mahalo.com/how-to-buy-gold Here is a list of web pages that can give you more information about buying and selling commodities and investing:

After you familiarize yourself with the preliminaries of buying commodities, and you know the procedure of investing your money, you are almost ready for the next step. First, you need to be able to understand your commodities broker when he or she talks to you, and you have to be able talk to him or her using the proper terminology.

Here are some of the terms you will probably hear the broker use:http://www.ltg-trading.com/glossary_of_futures_terms.htm

Bear Market - This means the current prices are declining. If you buy when the market is down, you are a Bear.
Bull Market - When market prices are rising. If you buy when you think prices will rise, you are a Bull.
Futures Commission Merchant - An FCM must be registered with the Commodity Futures Trading Commission and this is the person or business who accepts the orders to buy and sell futures and they also accept the necessary cash that is associated with the order.
The Fundamental Analysis - Is the study of all of the different possibilities that can change the actual supply and demand which will affect the price.
Futures Contract - This is the contract that you sign and it is completely legally binding. You are agreeing to buy or sell the listed item(s) on the date that is written on the contract.
Fully Disclosed - Your account that is in the hands of the Futures Commission Merchant
The Futures Industry Association - The official name of the national trade association for FCM.

Step 3: Call Your Broker

Now that you know how you are going to invest your money, and you know the type of gold futures you are going to invest in, call your broker. Tell him or her exactly what you want to do and how you want to invest your money. Do not assume that just because the broker is the expert, that he or she can read your mind.

After you have spoken with your broker and you have made the deal, you now have to sit back and wait to see what happens with the price of gold. If the price goes down, you lose money. If the price increases, you will make money. However, none of this matters until the date that is specified on the futures contract.

Less than 10% of the people who decide to invest in commodities make a substantial profit and you have to keep this in mind before you invest and while you are waiting for the contract to mature. If you have little to no experience, you should start slowly and remember - if you can't afford to lose it, don't invest it. http://goldprice.org/buying-gold/2007/07/gold-futures-trading.html