The Best Strategies For Trading Gold in Africa


Trading in commodities like gold, silver, and oil has been at the heart of investing for generations, and it’s the accessibility of these markets that make them so attractive to investors. From Asia to Africa, precious commodities are a trading sector that ‘never sleeps’ – a market is always open somewhere on earth, after all. Not only is it affordable to do so, whether you’re entering the market with a hundred dollars or several thousand, but the strategies and approaches you’re able to trade commodities with are very flexible, too.

As with a lot of commodities markets, the fundamental focus of your strategy comes down to the timeframes you hold onto certain assets. For example, if you’re investing in Gold ETFs – that’ll mean purchasing and holding onto those assets for potentially extended periods of time – possibly months, rather than the hours or minutes that currencies are sometimes traded within. Prices can fluctuate many times over a matter of days, and so the Forex trader has to have a clear investment goal in mind and a healthy risk appetite, to avoid panic selling.  

The option to invest in physical gold is perhaps the most obvious one. It typically requires a highly conservative approach, due to several reasons. It tends to have a slower buying and selling pace, no ability to sell shorts, its value won’t always reflect the value of trading in other gold products on the market due to mark-ups on bars or nuggets. The final issue is the need to physically hold these commodities somewhere. Finding adequate and secure proofing and storage facilities is a further expense. For the average trader in a large continent like Africa, you’re not limited to only purchasing physical Gold – here are some of the most popular alternative routes to investing in the best-known precious metal. 

Futures

Trading in Gold options and futures – instruments that represent physical Gold – are traded via a well-regulated exchange, and its strong security and regulations are one of its greatest assets. Usually, you’ll be required to lay down a deposit through a futures brokerage. This is due to the limitations on the smallest possible Gold CFD futures contract, which only covers slightly more than 935g of Gold. Therefore, by giving a small deposit, you’re able to cover the necessary margins and support the buying or selling of a single futures contract.

Trading Gold ETFs

Another popular route is to buy gold through an ETF (exchange-traded fund). The ETF is a collection of stocks and shares grouped together, so price changes in Gold ETFs are typically closely related to the fluctuations of physical gold’s price. By opening an account with a brokerage, you are able to access direct trading in these stocks and shares. Again, deposits are often common, as are commission fees on trades. If you’re looking to trade in gold under approximately $5000 in value, often this route can be impractical, largely due to those additional fees.

Trading Gold Mining Shares

A further option is to trade in Gold through shares in Gold mining companies. In Africa, there is an abundance of gold mines and so your connection to these markets is reasonably strong and local to your timezones. The value of Gold mine shares is directly tied to Gold’s own value, however, the same drawbacks – speed, costs, and minimum deposit – and the value of Gold itself are several additional factors that make gold mining shares more unpredictable.

While many forms of investing and trading tend to require a wealth of patience, or only remain open during a small window of trading hours, Gold markets allow you to apply strategies over hours or days, as you see fit. If you’re looking for a commodity that’s close to home and moves at an exciting pace, Gold may be an asset for you.

Staff writer