Is it good to invest in gold, by using high "leverage"?
Question:
So, is it of value to invest some money in gold or silver if your broker gives you high "leverage", 200:1?
And...what do you think about this site: http://www.gcitrading.com ?
Thanks alot!
Answer:
What you are considering doing is not actually called investing. It is called speculating. The high leverage makes it very speculative. 200:1 leverage is courting disaster. 100:1 keverage is only for the very experienced or for someone with more money than he knows what to do with. You can be wiped out in the blink of an eye. On the flip side of the coin it is also possible to make a lot of money expecially by pyramiding. Forget I told you that.
I think gold and silver are great investments right now. But you are talking about leverage. Leverage more applies to trading, not investing. Anything can be traded at any given time if you understand the mechanics of good trading. And, leverage is fine if you know the mechanics of doing it right. Do you? Or, are you just believing a broker? If you are just going with the recommendation of a broker, then how do you know if he or she knows what she is doing? I don't mean does he or she have credentials. I mean does she know how to trade. Most brokers I've dealt with cannot trade, otherwise they'd be traders not brokers.
I do recommend one thing: If you are going to use leverage, you need to understand what happens if it goes south. How much will you owe. If you are allowed leverage you better make sure that you have enough to cover it if it completely goes south. Otherwise, don't touch it.
I agree with Ryan. Precious metals are what you should be investing in right now, but I would avoid the high leverage as even a small, temporary move against your position could be disasterous. Invest in things liket the gold & silver ETF's or physical metals, but leveraged metals investing is only for those with experience and high risk tolerance levels and can monitor the markets on a continuous basis. Just my 2 cents.
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