How to Buy Comex Gold

gold safe

The world number one gold future is the well-known Comex, hands down! You will probably be interested in knowing how to get access to the world largest gold future market.

Before ever thinking about entering that market, good advice from different financial advisors and professional traders is imperative. Ask, and ask again, to make sure that this is the right decision you are taking. In other words, ask who you genuinely trust in them and trust in their knowledge. Doing homework and studying the decision beforehand is never a wasted effort.

First of all, Comex gold refers to gold future contracts traded in COMEX division. It is a division of New York Mercantile Exchange (NYMEX), the commodity exchange market under the umbrella of Chicago Mercantile Exchange Group (CME). Gold future contracts are standard contracts to buy or sell gold of the standard quantity and quality, which is one troy ounce (31.1034 grams) of 24 karat (99.99 pure) gold, for the price agreed upon today with delivery and payment at a future date. In other words, it is mid-ground between buyers and sellers to secure their future business. Buyers expect the price to rise later, thus buying it with the specified price now. On the other hand, sellers expect the price to go lower, therefore, selling it at the specified price at the moment.

The physical gold doesn’t usually get delivered, but cash settlements are remarkably common. Though, some brokers take their job extremely seriously and insist on delivering the real thing to their customers. It is perfectly legal, and it’s the customer’s right to have his gold instead of the money. There are delivery costs involved, but then again, the difference between the actual price of physical gold in the local market and the paper price of gold in the spot market might cover them plus profits.

The trader can sell or buy the contracts during their terms. However, in order to take the delivery, the buyer has to pay the price of the contract fully and wait until the term of the contract expires. After that, delivery arrangements take place till the customer has the gold in his own hands. That is what usually called “longs”.

On the other hands, “shorts” is re-selling the contract without having any intention to of taking delivery. Literally speaking, selling short is trading in the paper, not the actual physical yellow metal.

Ah, remember that future contracts doesn’t require to pay the whole value of the contract at once, usually 10% upfront and the rest on a specified date. This means going short or long is up to you. Some over-commit to make money over planning ahead enough, making them lose everything. That’s why it is almost a golden rule that can’t be broke to ask your financial advisors and do your math together.

If the term of the contract expires, and it is time to take the delivery, a notice of delivery will arrive, and the full value of the contract should be paid now. The buyer can keep the receipt, and keep the gold in a vault, with storage costs of course. Or the buyer could have the gold bullions shipped to somewhere else, using an armored car or some other means of transportation, with costs for sure. The additional costs might be trivial compared to the profits from the difference between the paper price and the actual price in the local market. Again, that’s why a financial advisor is a must, to consult and ask for advice.

To sum up, the first thing to be done is finding a broker and a financial advisor. That’s almost 2/3 of your way to start trading in Comex gold. Decisions and deliveries will be organized later on, depending on your region, and how well you can plan, organize and execute your calls. It takes nerves of steel and vast knowledge to enter the world largest gold market.



    • Mohamed Hossam

      Unfortunately, There are no COMEX brokers in the Middle East yet, as far as I know. There are well-known brokers in the UK and India, the nearest I could think of for someone lives in Dubai or Bahrain. You can contact any broker any where, including the US, by phone or e-mail.