There are many types of gold investments and with regards to is it possible to get a gold investment leveraged, the answer is a yes and a no. Let me explain.
Most of the types of gold investment are non-leveraged. These include physical gold bullion or gold certificates
However, you can leverage your gold investment in 2 ways. These 2 ways are
Trading Gold as Forex
In this instance, you would trading gold as a currency pair. It could be against the US dollar, Japanese Yen, Swiss Franc and a whole host of currency. This actually have the advantage that you could be amplifying your gains not only from the appreciation of gold in general but also the depreciation of the other currency.
Profiting from both ends of the stick
For example, if gold is generally on a uptrend, buying any gold investments would naturally make you money from the rising gold price. However, if you know that a particular country is in a unique crisis, you would be able to capitalise on the falling value of that currency by betting against it. In this way, assuming you are betting against the japanese yen, you can go long on XAUJPY. This would allow you to capture a larger profit, since you would be profiting both from rising gold price and falling japanese yen.
How Is it possible to get a gold investment leveraged
Trading such currency pairs are usually done using CFDs or contract for differences. This is highly leveraged and is considered high risks. Most of the platforms reports losses incurred by over 70% of their account holders. Therefore, this is advised for trained and experienced traders.
However, once you have mastered the art and science of trading, it can make you much more profits than just buying gold normally.
The margin requirement for gold currency pairs is usually 20%. What this means is that for every $1000 value traded in any gold currency pair, you would have to have an initial $200 put up to set the trade up. After which, there is a maintenance margin. This is the additional buffer before your losing trade is automatically closed out at a loss, when your funds have fallen to a level that is less than the maintenance margin. Level of maintenance are different and different formulas are used for different platforms.
This is one of the major reasons that you to have experience especially in emotion and discipline in careful management of your trades and margin requirements.
Make sure before you open your trade that you know the maintenance margin requirements of your account. Monitoring these closely is key to your trading success. Many blew up their accounts with just a few bad trades.
If you do not have any trading account and looking to start trading, you can visit FXTM. They have many webinars on many different trading strategies which you can get educated on.
Buying Gold Etf or Gold Mining Companies on Margin Account
Besides trading CFDs on leverage, you can also leverage buy the actual underlying asset . Many brokerages offer margin accounts which you can actually buy gold etf or gold mining companies equity on margin. Here in Singapore, I use Poems (phillips securities) for this purpose.
However, I usually use poems for my other short to medium term equity positions. The main reason is for gold investments, my preference is to hold physical for long term. For the short term, I prefer to trade gold as a forex pair.
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