Gold, silver and platinum bullion trading
Is investing in gold, silver or platinum ETFs the same as trading gold, silver or platinum bullion?
No. Gold, silver and platinum ETFs are listed on the stock exchange and units of which can be traded and settled like a stock, whereas gold, silver and platinum bullion is traded over-the-counter (OTC) as a commodity. You may refer to Q2-3 below to learn more about gold, silver and platinum bullion trading.
Is gold, silver or platinum bullion trading in Hong Kong regulated?
The precious metal markets are mainly for wholesalers who buy or sell precious metals such as gold, silver and platinum to meet business needs. The market is unregulated. Retail investors normally cannot trade in the precious metal markets directly; they can only conduct trades through unregulated bullion investment companies.
How risky is gold, silver and platinum bullion trading through unregulated bullion investment companies?
If you are actively targeted by bullion investment companies and respond to sales pitches without fully understanding what you are getting into, you may end up with open positions that are higher than you originally intended and therefore be exposed to significantly more risk than you realise. While you may open a bullion trading margin account initially with a relatively small sum, say $50,000, you may place more and more bets on margin later and end up incurring very high financing costs and transaction fees, and you may incur significant losses and liabilities which can be much higher than your initial investment as a result of the leveraging effect of the margin account.