What do you think about trading Gold with large amount?

What do you think about the future contracts for trading Gold? Do you think that this will be a good step to start with?

Contract Size: 100 troy ounces.



Price Quote & Tick Size: Dollars and cents per ounce; minimum tick size is ten cents per ounce or $10.00 per contract.



Contract Months: All months.



Trading Specs: Trades electronically on the InterContinental Exchange 2:30 am - 2:45 pm ET. Options floor trading hours are 0800 to 1300 ET.



Daily Price Limit: As of date of initial publishing, there were no daily limits; however, it is wise to consult exchange.

 

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To start with? No. If you are already a professional futures trader, then the systems, rules, filters, exits, etc... will probably work for gold as well. If you are inexperienced, then this is a good way to lose everything. Remember, in futures you can lose more money than you invest.

 

Not if you cover them.

 

Good call. The main reason bullion investors buy the metal instead of paper is to beat the system. That is no different than a bank (100 years ago) issuing out gold certificates or silver certificates and having little to no metals to back it up. Just wait until there is a run on futures contracts, that will make the spot prices explode.
Experts say that silver is so cheap because the price is being suppressed by an astronimical amount of futures contracts being sold and there is not enough physical silver mined up on earth to cover them. Thats why I focus on silver.

 

Not if it opens limit down for several days in a row. I don't know if this applies to the gold contract.

 

You're generally still covered about 85-90% on the principle if you know what you're doing. Your upside is also cut off though if the person options to buy.

 

Been there, done that, got the margin call!

 

Subtleties of the futures market:

http://www.financialsense.com/fsu/editorials/tustain/2010/0421.html, skip the first 3/4 and look at the end.
http://www.gold-eagle.com/editorials_04/tustain040804.html

Caveat: the guy does run a trading platform which competes with the futures market.