| Advantages |
1) Diversified Basket of Gold Mining Stocks
2) Profits Highly
Leveraged to the price of Gold (Earning will grow faster than increase in gold) creating better performance for stocks
3) Possibility of Increasing Dividends
|
1) Extremely simple, liquid, and easy to create a direct position in Gold
2) Highly
correlated with the underlying movement in spot
3) 1/10th the price of an ounce makes it accessible to retail trader
|
1) Pure Gold Play
2) Higher Leverage Available than Equities, Less than Currencies
3) Access to electronic platform that trades after hours
3) Standardized Contracts
|
1) Ultra low margin requirements allows for efficient use of capital–up to 100:1 Leverage
2) Fully electronic platform trades 24 hours per day with ample liquidity
3) Ability to Earn Interest
|
| Disadvantages |
1) Diversified Basket of Gold Mining Stocks
2) Profits Highly Leveraged to the price of Gold ( Earning will grow faster than increase in gold) creating better performance for stocks
3) Possibility of Increasing Dividends
|
1) Requires at least 50% of capital to establish a position
2) Trades only US market hours and therefore
vulnerable to large gap
openings
|
1) Loss can be greater than your initial capital
2) Exchange Fees and
Commissions add to costs
3)No round the clock
liquidity
|
1) Not 100% correlated with price of gold - may be subject to other economic and geo- political factors
3) No Fixed Exchanges
4) High
Leverage - Double Edged Sword
|
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