Gold Future Trading Profits | Is it mandatory to but 1 kg in Gold future?

July 29th, 2010| In India.

Gold Future Trading Profits | Is it mandatory to but 1 kg in Gold future?

One can buy a kg of gold for Rs.75,000. Unbelievable.  Let us see how it is possible.  It is a true factor that Gold prices are increasing day by day.  Expectations are also increasing.  Some one is saying that 10 grams of gold price may touch the Rs.50,000 mark in the coming 5 to 6 years and some other is saying that the prices of the gold will decrease considerably.  Whatever be the expectations the present scenario is that the gold prices are increasing.  Gold future tradings is one of the ways to encash the present situation by investing on gold.  Gold trading is most popular in other countries.  It is slowly gaining popularity in India.  Multi Commodity Exchange of India, National Commodity And Derivative Exchange and National Multi Commodity Exchange Of India are permitting the Gold Trading.

Gold Future Trading Profits

Gold future offers the chance to pay 5 to 10% of the total amount as margin and get the full benefit.  For example, one would need 18 lakh rupees to buy 1 kg of gold. But to hold one kg of gold in Gold future Rs 65,000 to Rs 70,000 are enough. If one believes that the price of gold will increase further, a contract can be purchased and kept it in your account. A short position  can be taken if it is believed that the price may fall.  That means sell the contract through the account and hold the position.  In both these methods one one kg of gold can be hold by paying a small amount. One can benefit from the fall and rise of the gold prices.  For example, 1 kg of gold was purchased with Rs.75,000 when the price of the gold was Rs.18,00,000.  If the price of the gold increases by Rs.50,000 in that month, the buyer also gets a profit of Rs.50,000.  The risk factor is also very high along with profit factor in Gold futures.  If the price of gold decreases by Rs.40,000 after buying the gold, the buyer would lost Rs.40,000 from his margin money.  Remember if the profit is going to be high, the loss is  also going to be higher.

Is it mandatory to but 1 kg in Gold future?

To attract small investors, exchanges are offering small size contracts (Lots).  Mainly 1 kg and 100 gms lots are available. But MCX is offering 8 grams lot in the name of Gold guinea.

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