What are the advantages and disadvantages of investing in gold?

Gold investment is a way of investment in financial markets. However, the transaction of investing in gold is different from the stock and fund investment that most of us are familiar with, and its operation is actually more difficult than that of stocks and funds. For novice investors, investing in gold has advantages and disadvantages.

From the favorable direction, gold investment is a two-way transaction that can be profitable in both long and short positions. The essence of gold investment is a commodity investment. Therefore, in compliance channels, gold investment is a transaction that can be long or short. No matter whether the international gold price rises or falls, investors who bet on the right direction can get the benefits of buying high and selling low.

On the downside, gold investment is also an investment method that is not conducive to new investors. First of all, gold investment is a very energy-consuming investment method. The international gold price fluctuates 24 hours a day (the world is closed on Saturday and Sunday). Therefore, gold investors need to always pay attention to the trends of domestic and international financial markets and the impact of these trends on international gold prices. Secondly, gold investment is a kind of leveraged investment. In domestic futures exchanges, gold futures contracts have their own leverage, and investors can only trade within the margin of futures accounts they receive. But for beginners, the fluctuation of account assets of gold investment will be amplified by leverage. When the international gold price changes, it is entirely possible that the accounts of new investors will be exposed due to excessive leverage. Thirdly, the domestic gold price is highly correlated with the exchange rate, and the fluctuation of RMB against the US dollar will also affect the domestic gold price. Therefore, gold investors need to study not only the fundamentals of gold, but also the influence of exchange rate on domestic gold prices. When the exchange rate fluctuates in an unfavorable direction, investors will also suffer additional losses.

Generally speaking, the investment and trading of gold is not an easy way for ordinary people to invest. "The market is risky, and trading needs to be cautious" is a principle that investors need to keep in mind in gold trading.