GOLD TRADING FUNDAMENTALS

The Ultimate Safe Haven Asset - History, Markets & Opportunities

WHY GOLD? - The Eternal Store of Value

Gold's Unique Properties

5,000 Years of Value:

• Money before paper currency existed
• Every civilization valued gold
• Survived every currency collapse
• Never gone to zero

Physical Characteristics:

• Cannot be printed or created
• Limited supply (finite resource)
• Doesn't corrode or deteriorate
• Universally recognized and accepted

Financial Characteristics:

&check; No counterparty risk (physical)
&check; Not anyone's liability
&check; Can't be hacked or frozen
&check; Portable wealth across borders
&check; Divisible and fungible

Market Characteristics:

• $13+ trillion market (all gold ever mined)
• Highly liquid 24/5 trading
• Multiple ways to invest/trade
• Central banks hold it as reserves

Why Traders Love Gold:

&check; Predictable price action
&check; Respects technical levels
&check; Clear fundamental drivers
&check; Smooth trends (less choppy)
&check; Multiple timeframe opportunities

Who Buys Gold:

Investors, central banks, jewelers, industrial
users, speculators, safe-haven seekers

Gold as Safe Haven

What Is a Safe Haven?

• Asset that retains or increases value
• During times of market turbulence
• When other assets are falling
• Flight to quality/safety

When Gold Shines:Economic Crisis:

• 2008 Financial Crisis: Gold +25%
• 2020 COVID Crash: Gold +40%
• While stocks crashed, gold rallied

Inflation Fears:

• 1970s stagflation: Gold +2,300%
• 2021-2022 inflation spike: Gold stable
• Preserves purchasing power

Geopolitical Tensions:

• Wars and conflicts
• Political instability
• Trade wars
• Investors flee to safety

Currency Weakness:

• Dollar falling -> Gold rising (usually)
• Currency devaluation fears
• Loss of confidence in fiat money

Gold vs Other Safe Havens:US Treasuries:

• Safe but can lose value to inflation
• Government debt (counterparty risk)

Cash/USD:

• Loses purchasing power over time
• Can be printed infinitely

Gold's Role in Portfolio

Portfolio Diversification:

• Low/negative correlation to stocks
• Stocks crash -> Gold often rises
• Natural hedge for equity portfolios

Traditional Allocation:

• 5-10% of portfolio in gold
• "Insurance" against catastrophe
• Rebalance when allocation drifts

Historical Performance:Long-Term Returns:

• 1971-2024: ~8% annualized
• Beat inflation over long periods
• Not about growth, about preservation

Volatility:

• Less volatile than stocks
• More volatile than bonds
• Annual range: 10-30% typical

Trading vs Investing:Investing (Long-Term):

• Physical gold, ETFs
• Hold for years/decades
• Portfolio insurance

Trading (Short-Term):

• Futures, options, leveraged ETFs
• Days to months holding period
• Capitalize on trends/volatility

Key Insight:

Gold is both an asset to own AND trade
Different approaches for different goals

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HOW TO TRADE GOLD - Markets & Instruments

Physical Gold

1. Gold Bullion:Gold Bars:

• Sizes: 1 gram to 400 oz (12.4 kg)
• Most common: 1 oz bars
&check; Lowest premiums over spot
✗ Storage and security needed
✗ Less liquid than coins

Gold Coins:

• American Gold Eagle (1 oz)
• Canadian Gold Maple Leaf (1 oz)
• South African Krugerrand (1 oz)
&check; More liquid than bars
&check; Universally recognized
✗ Higher premiums (3-10%)

2. Gold Jewelry:

✗ NOT recommended for investment
• 40-100% markup over gold value
• Craftsmanship premium
• Poor resale value

Physical Gold Considerations:Advantages:

&check; You own it (no counterparty risk)
&check; Crisis insurance
&check; Privacy (if purchased anonymously)
&check; Can't be hacked/frozen

Disadvantages:

✗ Storage costs/risks
✗ Insurance needed
✗ Buy/sell spreads (dealers markup)
✗ Authentication concerns
✗ Not practical for trading

Physical gold = Long-term store of value only

Paper Gold (Best for Trading)

1. Gold Futures (GC):

Symbol: /GC (COMEX)
Contract Size: 100 troy oz
Tick: $0.10 = $10 per contract
Point Value: $100 per $1 move
Margin: ~$10,000-12,000 initial

Advantages:

&check; High leverage (10:1+)
&check; Excellent liquidity
&check; Tight spreads
&check; 23 hours/day trading
&check; Professional platform

Disadvantages:

✗ Requires futures account
✗ Contract expiration/rollover
✗ Large position size ($200K+ notional)

2. Micro Gold Futures (MGC):

Symbol: /MGC
Contract Size: 10 troy oz (1/10 of GC)
Tick: $0.10 = $1 per contract
Point Value: $10 per $1 move
Margin: ~$1,000-1,200 initial
Perfect for smaller accounts!

3. Gold ETFs:

GLD (SPDR Gold Shares):
• Most liquid, largest volume
• 1 share ~ 1/10 oz of gold
IAU (iShares Gold Trust):
• Lower expense ratio than GLD
• Slightly lower price per share

ETF Advantages:

&check; Trade like stocks (easy)
&check; No expiration/rollover

GOLD MARKET STRUCTURE

Trading Hours & Sessions

24-Hour Market (Nearly):

Sunday 6:00 PM ET to Friday 5:00 PM ET
Daily close: 5:00 PM - 6:00 PM ET (1 hour)
23 hours per day of trading!

Major Trading Sessions:Asian Session:

6:00 PM - 2:00 AM ET
• Sydney/Tokyo/Hong Kong opens
• Generally quieter, lower volume
• Good for ranging strategies

London Session:

3:00 AM - 12:00 PM ET
• HIGHEST VOLUME (50%+ of trades)
• Most important price discovery
• Trends often develop here
• London Fix: 10:30 AM ET (critical)

New York Session:

8:00 AM - 5:00 PM ET
• COMEX futures active trading
• Overlap with London (8AM-12PM)
• Highest volatility during overlap
• US economic data releases

Best Trading Times:

Prime Time: 8:00 AM - 12:00 PM ET
• London + NY overlap
• Highest liquidity
• Tightest spreads
• Best for breakouts/trends

Avoid Trading:

• Sunday open (wide spreads, gaps)
• Asian hours (unless ranging)

Price Quotation & Specs

How Gold is Quoted:

Price: US Dollars per troy ounce
Example: $2,650.30
Decimal: To nearest $0.10

Troy Ounce (Not Regular Ounce):

• 1 troy oz = 31.1 grams
• 1 regular oz = 28.35 grams
• Troy oz is ~10% heavier
• Standard for precious metals

GC Futures Contract Specs:

Contract Size: 100 troy oz
Point Value: $100 per $1 move
Example: Gold moves $2,600 -> $2,610
• $10 move = $1,000 P/L per contract

Typical Daily Range:

Quiet days: $10-20 per oz
Normal days: $20-40 per oz
Volatile days: $50-80+ per oz
Crisis events: $100-200+ per oz

Margin Requirements:

GC (100 oz):
Initial Margin: ~$10,000-12,000
Maintenance: ~$9,000-11,000
Notional Value: ~$265,000 (at $2,650)
Leverage: ~22:1

MGC (10 oz):
Initial Margin: ~$1,000-1,200
Maintenance: ~$900-1,100
Notional Value: ~$26,500 (at $2,650)
Leverage: ~22:1

Margins vary by broker and volatility

Contract Months & Rollover

Gold Futures Months:

Even months (6 per year):
• February (G)
• April (J)
• June (M)
• August (Q)
• October (V)
• December (Z)

Most Liquid Contracts:

• Front month (nearest expiry)
• Next month
• Always trade these for best fills

Contract Expiration:

Last Trading Day: 3rd-to-last business
day of contract month
First Notice Day: ~20th of prior month
CRITICAL: Close before FND!

Rollover Process:

When to roll: 5-10 days before expiry
How: Close current month, open next
Example (April contract):
• March 25: Sell April /GC
• Same time: Buy June /GC
• Or use calendar spread order

Physical Delivery WARNING:

• If you hold past First Notice Day:
• You WILL receive 100 oz gold bars!
• Delivery charges apply
• Storage required
• Solution: Always close before FND
• Set calendar alerts!

ACCOUNT SIZE & RISK MANAGEMENT

Minimum Account Requirements

For GC Futures (100 oz):

Absolute Minimum: $15,000
• $12,000 margin requirement
• $3,000 buffer for drawdown
• VERY risky at this level
• One $30 move against = -20%

Recommended: $25,000-30,000
• Allows 2-3% risk per trade
• Room for multiple positions
• Can weather volatility
• Proper risk management possible

Comfortable: $50,000+
• Trade 1-2 contracts safely
• Professional-level flexibility

For MGC Futures (10 oz):

Minimum: $3,000-5,000
• $1,200 margin + buffer
• Good for learning
• 1/10 the risk of GC

Recommended: $10,000
• Trade 2-3 contracts
• Proper position sizing
• Best for most traders

For Gold ETFs (GLD/IAU):

Any amount (even $100+)
• Buy fractional shares if available
• Perfect for investors
• Not ideal for active trading (less leverage)

Position Sizing Examples

Risk Per Trade: 2% RuleExample 1: $25,000 Account (GC)

Max Risk: 2% = $500
Stop Loss: $20 from entry
Risk per contract: $20 x 100 = $2,000
Max Contracts: $500 / $2,000 = 0.25
Trade: 0 contracts (too large for account)

Solution Options:

A) Tighter stop: $10 stop = 0.5 contracts
B) Use MGC: $20 stop = 2.5 micro contracts
C) Wait for bigger account

Example 2: $50,000 Account (GC)

Max Risk: 2% = $1,000
Stop Loss: $20 from entry
Risk per contract: $2,000
Max Contracts: 0.5 -> Trade 0 or 1
With $10 stop: Can trade 1 contract safely

Example 3: $10,000 Account (MGC)

Max Risk: 2% = $200
Stop Loss: $20 from entry
Risk per contract: $20 x 10 = $200
Max Contracts: 1 MGC perfectly sized!
With $10 stop: Can trade 2 MGC

Key Takeaway:

Stop loss size determines position size
Wider stops = smaller positions
Tighter stops = larger positions
Always calculate BEFORE entering trade
Never exceed 2% risk per trade

GETTING STARTED WITH GOLD TRADING

Step 1: Choose Your Approach: Long-term investor? Physical gold or ETFs. Active trader? Futures (GC/MGC). Each requires different capital and mindset.
Step 2: Open Right Account: Futures trading needs futures broker (NinjaTrader, Interactive Brokers, TD Ameritrade). Stock trading needs standard brokerage. Get real-time data feeds.
Step 3: Fund Appropriately: Start with MGC if under $25K account. Don't trade GC with less than $25K. Paper trade first until profitable 3+ months. No shortcuts.
Step 4: Study Market Drivers: Understand dollar/gold inverse relationship. Learn FOMC impact. Track real rates. Watch geopolitical events. Gold has clear fundamental drivers.
Step 5: Master One Strategy: Don't try everything at once. Trend following works great in gold. Support/resistance very reliable. Pick one approach, master it completely.
Step 6: Focus on London/NY Hours: Trade 8AM-12PM ET for best action. Avoid Sunday open and Asian-only hours. Volume = opportunity. Low volume = risk.
Step 7: Respect the Rollover: Set calendar alerts for First Notice Day. Roll positions 5-10 days before expiry. NEVER let contract expire on you. Physical delivery is real.
Step 8: Track Performance: Journal every gold trade. Track win rate, average R:R. Gold traders should aim for 50%+ win rate. Measure improvement monthly. Stay disciplined.
Remember: Gold has traded for 5,000 years and will trade for 5,000 more. No rush. Build skills slowly. Respect the market. Patience is golden.

Gold rewards patience, punishes greed. Trade it with respect. - TradeHive

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GOLD TRADING DISCLAIMER

Gold trading involves substantial risk of loss and is not suitable for all investors. Futures and options trading is speculative and carries risk of total loss. Leverage amplifies both gains and losses. Gold futures can experience significant price volatility. Physical delivery of gold futures is possible if positions held through First Notice Day - delivery charges and storage requirements apply. Margin requirements vary by broker and market conditions. Account size recommendations are guidelines not guarantees of success. Past performance of gold is not indicative of future results. Gold ETFs involve management fees and tracking error. Physical gold involves storage costs, insurance, and authentication risks. Bid/ask spreads on physical gold can be significant. Historical gold performance varies greatly by time period. Gold is denominated in US dollars - currency fluctuations affect returns. Trading hours, contract specifications, and margin requirements subject to change. Rollover dates must be tracked carefully to avoid unwanted delivery. Market drivers discussed are educational - actual price movements depend on complex global factors. This material is for educational purposes only and does not constitute trading advice or recommendations. Consult licensed financial professionals before trading. TradeHive is not liable for trading losses. Trade at your own risk with capital you can afford to lose.