Investing in the Gold Futures Market - dummies

Investing in the Gold Futures Market

Gold futures contracts provide you with a direct way to invest in gold through the futures markets. You can choose from two gold futures contracts that are widely traded in the United States.

  • COMEX Gold (COMEX: GC): The COMEX gold futures contract was the first such contract to hit the market in the United States (back in the 1970s). It is traded on the COMEX division of the New York Mercantile Exchange (NYMEX), and it’s the most liquid gold contract in the world.

    COMEX is used primarily by large commercial consumers and producers, such as jewelry manufacturers and mining companies, for price hedging purposes. However, you can also purchase the contract for investment purposes. Each contract represents 100 Troy Ounces of gold.

  • CBOT Mini-Gold (CBOT: YG): Launched in 2004, the Chicago Board of Trade (CBOT) gold contract is a relative newcomer to the North American gold futures market. However, it’s a very popular contract because you can trade it online through the CBOT’s electronic trading platform.

    In addition, at a contract size of 33.2 Troy Ounces, the mini is popular with investors and traders who prefer to trade this smaller size contract than the larger 100-ounce contract offered by CBOT or COMEX.

Although the CBOT also offers the more traditional, full size 100-ounce gold contract, the COMEX’s 100-ounce contract is the more liquid of the two. However, this may change in the future.