Pride Of The Web –

Gold has broken through to yet another record high. The previous high of $1226 per troy ounce was set in November 2009. Since then the gold market has dropped as low as $1044. We are now in the middle of 2010 and gold is trading $20 higher than its previous record level.

In an almost contrarian view to the Euro, it is the bears who are looking a touch green about the gills, especially as a strengthening Dollar has normally been associated with a weakening gold price.

The reason the ‘strong dollar = weak gold price’ equation is not currently working is probably due to the debt problems in Europe and Japan. As Simon Denham of Financial Spreads said, “While the markets look vulnerable, gold will maintain its safe haven role. I have to admit that the response of the Central banks and the IMF to the Southern European debt problems is almost guaranteed to ensure continued volatility in world markets.

“Looking at the longer term chart, the bull-run for gold still looks healthy but the higher it gets the more prone it will become to sharp corrections to the downside. Buying at these levels now requires quite deep pockets, certainly if you want to buy the physical variation”.

Having said that, you don’t have to buy gold to speculate on it. One particular type of financial trading, namely financial spread trading, has a range of attractive features and is worth investigating further.

The simple breadth of markets makes financial spread trading an interesting investment option. Spread trading companies tend to offer thousands of markets from UK and US Stocks to Sugar, Oil, Gold and Dollar / Yen rates.

Also, with spread trading, investors can go long or short of a market depending on how they feel it will move. If they feel the gold market will go up they will ‘go long’ or speculate on the price to go up. Likewise, if an investor feels the gold market will go down then they will ‘go short’ and speculate on the price to go down.

Of course, as with all investments such as trading shares, funds, pensions, housing etc, you can lose money. With spread trading you can lose more than your initial investment.

So why would an investor trade if there is a risk of losing money? Well we have already outlined a couple of useful options and it is interesting to note that with this type of trading your losses can be limited. Firms like SpreadCo let you use a Guaranteed Stop Loss which works as an automatic request to close your trade if your position moves against you by a set amount. In addition, the Guaranteed Stop Loss does not close a profitable trade.

Before you consider investing though, note that spread trading carries a high level of risk to your capital. Please ensure that spread trading matches your investment objectives. Make sure you familiarise yourself with the risks. If necessary, seek independent advice.

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