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If you are looking to make shorter term gains through gold (for example by trading gold price via spread betting), you need to understand what factors can make the gold price move higher or lower.

There are a number of factors including the following:

- Economic turmoil: During times of economic uncertainty, gold has been known to increase in price. This is because gold is traditionally a safe haven for investors when things are tough. In the global economic recession that started in 2007, gold experienced a near unprecidented bull run as people liquidated riskier assets (stocks, bonds, etc) and put the money in gold.

- Global turmoil Wars: Global conflicts can often lead to a stronger gold price. During times of relative global peace, the gold price is usually lower than during times of war.

- Global demand for gold: In particular from countries. If growing nations like India and China increase their consumption and demand for gold, you can expect the price to increase. Basic supply and demand economics apply to just about everything in life.

- Inflation: Gold is traditionally a hedge (protection) against mass inflation. When inflation is broadly expected to rise, expect gold prices to follow suit.

- Quantitative Easing: When governments print money in huge amounts, it often serves to increase inflation in the medium and longer term. Governments sometimes print money during times of recession to help business and the economy. For example, during the UK banking cricis the British government set about a process of quantitative easing to rescue banks and other industries who were at risk of failing and hence creating mass job losses. This quantitaive easing involved printing billions of pounds into the economy, and the United States did something similar to the tune of trillions of dollars. Did the price of gold rise during this time? You bet!

Understanding how gold works and keeping an eye on these factors can really help you to make money by predicting the likely price direction of gold.

You can find out the price of gold by visiting the free Yahoo Finance site.

The price in gold fluctuates by as much as 1% to 1.5% on average on a DAILY basis. By understanding how to anticipate the movements, it is possible to make money by actively trading gold. How? Through a process known as SPREAD BETTING.

What Is Spread Betting?

Spread betting is a financial “trade” that allows you to effectively bet on the direction on most financial markets, including gold. Many brokers offer spread bets and there are specialist spread betting companies that have been set-up to allow you to bet on spreads.

Note, as with any form of trading there is risk involved of losing your money so it is advised you read more about spread betting as well as how to anticipate short term gold movements. Here are some positives about using spread betting to make money on the gold price:

- One of the best things about spread betting is that it is tax free (in the UK – other countries may have some tax involved).

- You can bet on gold going either up or down. With traditional forms of gold investment, it is only possible to buy gold in the hope it goes up. However, if you believe that gold is about to lower in price, you can take advantage of this by “shorting” gold via your spread bet account.

- Many spread betting companies allow you to bet small amounts than larger brokers. This is ideal for smaller individuals who do not wish to risk a lot of money, but still want to be able to trade the price differences in gold.

While you do not pay any tax (in UK) on spread betting, the spread betting company makes its money on the “spread” – this is a difference in the price charged to buyers and sellers. So, if you were selling the gold position you had, you would receivce a marginally lower price than if you were buying. It works on the same basis as buying currency from a broker (for example if you were buying holiday money). This is the difference between the “bid price” and the “ask price”.

With spread bets you can also speculate on the gold performance over different timescales. For example, a short term gold trader may only be interested in fast daily profits, while a medium term trader may hold a gold position over a period of days, weeks or even months.

You should research your spread betting broker carefully before opening an account – there are a mix of good and bad ones around.

It’s no secret that some people owe the majority of their wealth (or even Empires in some cases) to gold. Throughout the ages, gold has managed to continually increase in value over time. It is it’s scarcity, and the allure of it that means gold will ALWAYS be in demand. And once you know the different ways of timing your buying & selling of gold you can always earn money.

1. Buying Gold When It’s On A Long Term Bull Run: Investing in gold when it is on a long term increase can be a good strategy. In the stock market, buying gold (or anything) when it’s on a rising trend is called “riding the bull market”. Generally, gold tends to be either rising or falling in the long run. When you know it is rising, there is usually some additional gains to be had unless you time it just as it turns.

Ways of riding this bull trend is through the purchase of individual gold stocks (eg miners), or you can choose gold funds. You can also opt for illiquid methods of gold holdings like coins and bullion – but these can be tricker to buy and sell quickly.

2. You can also make money when gold is FALLING when you know how to. This requires some education and skill – if you believe that gold is falling, you can use something called “spread betting” – this allows you to make money as gold FALLS. It is somewhat a risky method to use as if you get it wrong, you can end up losing a bit of money.

You can learn about spread betting on the internet – and it is free to set-up a spead betting account.

Here is an alternative to gold – buying rare coins as an investment. It’s slightly off topic, but it may interest some readers.

The advantages of buying rare gold coins are clear – gold is and probably will always be a highly valuable commodity to own. Buying rare gold coins allows the investor not only to have a stake in the competitive collectors market, but also to own gold at a time when the general price of gold is on an upturn.

However, it is also possible to invest in non-gold rare coins that can also increase in value. The rare coin market is cyclical, and many rare coins have been trading at the lower end of their historical spectrum of late. This represents a buy & hold opportunity if you know which coins to invest in.

Here are a few tips on buying and selling rare coins:

Many Of The Same Rules Apply As When Purchasing Gold Coins. When purchasing rare coins, many of the fundamental rules that we went over for purchasing rare gold coins still apply. For example, you would always want to go via a reputable and established dealer and try and obtain independent valuation advice before purchasing an apparent rare coin.

Educate Yourself On Rare Coins & What Their Values Are Before Purchasing. The more you learn about rare coin collectables the better. Familiarize yourself with the most valuable rare coins that will always preserve their value.

Shop Around
Before committing to any purchase, shop around to see if the rare coin can be purchased any cheaper elsewhere. Visit several dealers and get a feel for the price before jumping in. An increasing number of coin dealers are misrepresenting the actual value of the coins they sell. Even if the actual details of the coin are correct they try and capitalize on the naivety of inexperienced collectors and charge double, treble or more of the actual value of the coin. In such a case the buyer may have to wait a lifetime or more for the actual value to catch up with what they paid for it!

Take Any Investment Opportunities With A Pinch Of Salt. Many rare coins that are not gold can still have investment value – but remember that a non-gold coin will not have the safeguard value that gold coins provide. Beware when being given any sales pitch about the investment value of any rare coin.

Silver Coin – Take Advantage Of A Strengthening Silver Market. Silver, like gold, is seeing an upturn in its base price (at the time of writing). This means that investing in rare coins with a high silver content can provide an additional safety net.

For individuals who like the idea of owning gold but not confident enough to pick stocks, buying mutual/investment funds is a very good alternative. It allows the investor to own a diverse portfolio of gold based investments that have been selected by a professional. There are a diverse range of investment/mutual funds available for the gold investor and there is the option to opt for solely gold based funds or a precious metals mix.

Understanding how to analyze an investment fund is almost as complicated as analyzing an individual stock, but the following should be considered before choosing a particular fund.

Funds Can Have Costly Fees Attached To Them Before going with a fund you should beware that the fund managers will take a fee that comes out of your investment. The actual fee is a percentage of your investment and it can vary depending on the type of fund (typically between 0.2% to 2% or even more). This is an annual fee that is taken from the value of your investment (and it doesn’t matter if they have made or lost you money – they will still take their fee). There are a huge number of mutual and investment funds spanning over all sectors and what they charge can vary quite significantly.

Big Multi-National Run Funds And Their Sleazy Marketing Tricks. Some fund management companies launch new funds frequently (based on the latest investment flavor of the month). This can have an adverse effect on the way your fund performs if enough research/attention is not being given to it.

Performance Tables – Do They Matter? Many experts are divided on the usefulness of performance tables of funds. Many believe that in terms of picking funds performance tables are quite worthless. So should you abolish performance tables altogether? The best thing to do is analyze the performance of several funds over a period of time. Understanding who is running the fund and what their track record is can be as important as anything the performance tables may suggest.

Ultimately, there is no “perfect” method of investing in anything – though investment/mutual funds can be a very good vehicle for the inexperienced person who understands the potential of gold and wants exposure to it from a company ownership perspective. A variation to buying into funds that hold gold stocks is to use an exchange traded fund – here the investor buys into shares that are directly linked to the market price of gold.

Where The Big Gold Deposits Are – Look To Chinese Companies

Traditionally, the big gold producing countries have been Australia, South Africa and the United States but China is strongly coming up as a gold mining nation. They are expected to get into the top three gold producing nations within a decade and the exciting thing is that gold stocks in China are available at a reasonable discount compared to their international peers. While it’s out of this books scope to provide specific stock tips, you may well be able to discover highly valuable gold plays in China (or invest in funds with exposure to Chinese gold).

Buying Gold Bars
Buying solid gold bars might be something you think only happens in certain types of movies, but in fact some investors do buy up gold bars. Gold bars are available in different sizes and can even have different finishes. Obviously, the bigger the bar the more you pay overall…but the unit costs can actually be cheaper when you buy bigger bars.

You can obtain gold bars from special dealers who will provide a certificate of authenticity. The gold bar should be 99.99% pure and come sealed in plastic. As with coins, you can also obtain gold bars from eBay but this can be somewhat trickier than buying coins here. Gold bars are fairly simple to both buy and sell and so can form a good vehicle to own gold.

Gold Futures & Options – Experienced traders & investors may wish to consider using futures & options as a way of making swift gains from the price of gold. This type of trading can be risky unless you know what you are doing.

Gold Certificates
It’s possible to purchase a gold certificate that marks you as the owner of bullion stock that is held by an institution. It’s a little known way of holding and benefiting from a bullish gold market without the hassle of stock/fund picking. The expenses to be considered are insurance & storage.

Jewelry
While it may not be your typical financial investment, gold jewelry is still a form of gold (and in some countries is used as a means of saving & accumulating wealth).

The Hype Surrounding “Sunken Treasure” Gold Coins – if you’ve been a gold coin collector/investor for some time then you’ll no doubt be aware of golden coins available for sale that have been rescued from sunk ships. Beware that these coins are sometimes marketed cleverly and sold at hefty premiums over and above their actual value. In some cases this can be a good chance to own valuable gold coins – but only if the analysis stacks up. Ultimately, you will want to analyze the coin thoroughly. What is it’s gold content? What will it’s value be on the open market? Has the coin suffered any damage because it has been submerged underwater for so long (this is quite likely so try and avoid buying sunken treasure coins that you have not seen firsthand).

Keep in mind also that as an investor, any coins you own must be of the highest graded quality to appreciate in value. Typically, you would want a grading of at least MS-63 and nothing below that.

Always remember, the better coins will perform better and sell whatever the market condition.

Bullion Coins Are Not Rare – Beware Of Dealers Who Will Try And Make You Think They Are! Bullion coins are those that have a value based on their gold content rather than their rarity. These type of coins will increase or decrease in value based more on the underlying price of gold than anything else. Coins that fall under this category include the South African Krugerrand and Canadian Maple Leaf. Some shady dealers may try and overstate the actual value of these coins by making them out to be rarer than they actually out. Be on the lookout for this sneaky tactic when buying and always obtain quotes from multiple dealers before purchasing.