What You Need To Know About Gold Stocks
Friday, July 04, 2014
To engage in the trade of gold, you do not always have to buy gold bullion and entrust their storage in a safe place. You can even become the owner of a gold mining company with a capital customize your abilities.
You can trade stocks and gold through trading platforms, commonly called option. For more details, please learn about what gold stocks and gold stock options.
Gold Stocks
Shares of gold is not gold - gold shares are shares in gold mining companies. If the gold price rises, the profits of gold mining company should rise and consequently stock prices should also rise. There are many factors to be taken into account and is not always the case that a share price will rise when the gold price rises. This needs to be considered as a means of considering the performance and capabilities of management, auditors, geologists, implementation of trade unions, gold hedge position and whether the company is producing or exploring done, the cost basis, how much of the reserves in the ground and whether its implementation is subject to economic , politics, nationalization or environmental risk.
Individual gold stocks would be considered a very volatile and has a high risk. Gold stocks are considered as more speculative because there are scenarios present a higher risk. However, additional risk can be offset by the leverage which can generate higher profits anyway. Higher profits as expected from gold mining companies and has a capitalization of senior medium large with no proven gold reserves and strong earnings that have strong balance and growth and production of resources and effective management of the company.
Gold Stock Option
Gold stock option is a contract between two parties ends at an agreed time in the future. Contract purchasers who bought the rights, and not the obligation, to buy shares of gold mining (commonly called 'call' in the option) or sell (commonly called 'put' in the option) gold mining stock at a specified price, on or before the agreed date, the an expiration date.
Gold stock options allow the trader to increase leverage and can control a large stock position with only a small capital issued. However, because the option contract typically offer only very short-term, the stock could end up worthless with all the missing expenditures. Gold stock options allow speculators to make bets on market movement without having to take up or down direction. Therefore, the gold stock options for traders often said to trade volatility than trade prices.
Although the tendency as a form of trade volatility, stock options and even gold stocks other options enable traders to trade without a spread like that of the MT4 and MT5 platforms. As usual substitution trading profit will be subject to a discount of 20% to 40% depending on the direction that we take to make a profit. You may be offered a larger profit for the direction that may not be profitable, this is a game about options broker so that you will be tempted to take a direction that ends on losing money. In response to this offer, professional traders generally do not drool and prefer to trade gold stocks follow their professional strategies.