Gold futures are an interesting concept. A future is a deal to trade gold at terms you decide on at the moment, with the idea of settling things in the future. The investor doesn’t have to pay the full price at the time, nor does the seller need to deliver the gold. When the actual date to conduct the exchange occurs, that’s when payment and receipt of goods are due. It’s typically a three-month period, but it can vary. Traders dealing in gold futures like to use this delayed period to speculate about both buying and selling. Sometimes they might re-purchase anything they’ve previously sold so they’re only required to settle their own losses and gains. Gold futures allow investors to trade in large amounts, take more significant risks, and possibly get a higher return in the future. The disadvantage here is that if gold prices fall, you’ll end up paying larger margins, which you can’t avoid while investing in gold futures. So, always consult your financial advisor prior to making a commitment!
