Published On: Mon, Feb 4th, 2019

Everything to know about the Bullion Trade

Bullion Trade

Bullion is a word used to refer to precious metals such as gold, copper, and silver which are in the form of ingots or bars. Of all the precious metals, gold is the highly traded one.

Gold can be traded in the form of a gold bar or coin, most people prefer the gold bar since it does not have to be altered, but with the case of a gold coin, more costs are incurred in the alterations.

photo/ Steve Bidmead via pixabay

How to Trade Gold

Some of the ways that gold can be traded include: physical or OTC trading or through extend-traded fund (ETF) and through a contract for difference (CFD).  Physically trading gold is when you own gold which is tangible and you sell it to someone. You will have to own a storage facility for it, and this can be costly too.  The good news is that there are gold bullion dealers to help out with this.

For the ETF, there is no physical access to the gold you are buying or selling, as an investor your end product will always be cash and not the precious metal in physical form. It is similar to individual stocks. Buying gold through the ETF is secure since it is backed by transparency by the service providers.

Buying or selling through the CFD also, you don’t have to own the gold physically. Here the traders make suppositions on the gold prices; the estimate of the CFD is the difference of the initial price of the gold when purchased and its current price. For this kind, one needs to be experienced, or one risks to suffer great losses. One can also seek guidance about this from their broker or his/her service provider.

OTC Bullion Trading and Exchange

With the OTC trading method, one gets the exact feedback one wants. This allows bulk transactions and one can establish a rapport with a client and they can continue trading together. This gives room for expansion in the business as the client keeps coming back, and if he/she loves what he is getting, he/she will bring other customers on board. With this kind also, transparency is not an issue, one can establish the quality and value of the gold or precious metal and be sure of what they are getting into. Doubts get cleared and trust issues are sorted out. This is the surest way of going about this trade; you can either accept or reject an offer and choose another one that works better for you.

For exchange trading, the risks can be great and there is little or no connection with the client. One also has many worries since it’s not a tangible kind of trade.

Quality Assurance

Before getting into such a business, acquire all the knowledge you can get. Many will try to con you or use you.  

The genuineness of the gold is an important aspect in this business, be sure of what you or your broker are buying. Genuine gold should have a stamp which will include among other things; the registration number, its weight, and purity.

The person, service provider or the trading platform you intend working with must be bona fide. Carry out background checks on them. Some will provide you with additional services which can help you manage your business properly. The otc bullion trading  saves you from many hassles, and why go through all the risks when you can safely transact such a business physically without involving third parties.

Author: J. Shacks

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