Beginners guide to Gold trading in South Africa

Gold is a timeless asset, never losing its popularity and even today gold is considered one of the most reliable and valuable assets to hold. Gold mining and trading have an extensive history. As gold was found in small pieces on the bottom of the river it was easier to find and later on, people started mining it as well, therefore gold was one of the first precious metals to be mined. Since then, different civilizations have agreed about the value of gold and have chosen it as the universal form of trading goods. Gold is a metal that does not really lose its value and therefore it is seen as one of the best ways for holding precious assets for some individuals. With this, many people get the question of how to trade gold in South Africa and why you should do it.

Since gold become the universal way to trade goods, countries adopted the gold standard. It is a monetary system which basically means that the national currency like ZAR is backed up by the gold reserves of South Africa. All countries were using the gold standard until the UK abandoned the system during the first World War. Later during the 20th century, most of the other countries abandoned it as well. The reason behind it is very logical, the gold supply was increasing very slowly while the economic development was going faster and it would otherwise lead to currency inflation. South Africa abandoned the gold standard in 1932.

Gold trading is still a very lucrative business for many, especially in South Africa. In this article, I will talk about how to start trading with gold in South Africa, what are the advantages and risks associated with it, and what are the other ways around.

How can you trade physical gold?

When it comes to the physical trading of gold there can be a lot of questions, especially if you are a beginner and you do not know anything about trading. There are numerous factors to consider, such as where to buy physical gold, where to store, when to sell, and so on. I will try to answer all of these questions for you in the simplest way possible and give you some gold trading basics. Let me start with defining gold as a trading asset.  Physical gold that you can trade with comes in two different forms, one is gold bullion and another is gold coins.

gold trading in South AfricaGold coins

As gold in its true form is very soft, pure gold is not suitable for making coins, therefore gold coins are usually made of an alloy. What it means is that the gold is mixed with other metals to give it more durability. Gold coins are issued by a predominant country or respected private entities, they are mostly used as collection assets or trading instruments. Gold coins are the best investment for small investors that cannot afford larger ones. Some of the finest gold coins you can trade with are U.S Gold Eagles, U.S Gold Buffalos, Canadian Gold Maple Leafs, and of course South African Krugerrands.

gold trading tips for South AfricansGold bullions

Another way to start trading gold in South Africa is to trade with gold bullions. These are the bars, nuggets, or ingots you see in movies. A Gold bullion value is defined by its purity and mass rather than by a face value like money. This is why it is the safest and the most lucrative way to invest in gold. Compared to the coins the additional expenditure such as the commission of gold bullion investments is not high. It has very high liquidity and therefore it is easy to convert into cash.  Due to these reasons, many big investors prefer to invest and trade with the gold bullion as it is a good way to avoid the inflation of the dollar.

Where to buy and sell physical gold

Buying physical gold is not much of an issue, like everything, you can buy it online. There are many websites that are selling gold in different ways – as bullions and coins as well. You need to inform the seller which gold bars you want to purchase by their weight, price, and quantity. After the purchase, the company will deliver it to you.  There are some things you need to consider when buying gold:

  • One of the main tips on the gold trade is to remember that when buying gold buy it in workable sizes. If you are making a huge investment make sure not to have big pieces of gold. You might want to buy a lot, but not everyone wants to buy that much from you. Therefore having more gold in small sizes will do you better when you want to sell them.
  • Before buying gold always check the actual spot price. When you are buying it there will be given a seller’s profit margin as well as some other charges like handling fee. You need to make sure that those charges are reasonable.
  • Check the reputation of the dealers. Look at the dealers as the Forex brokers. You would not trade with the broker without checking it out. The same goes for gold sellers. There are websites that provide information about major sellers. Also, all the reputable dealers should have displayed information about additional charges.

The answer to the question of how to trade gold in South Africa is pretty simple. You need to look at it in the same way as anything you trade for to make profits. You need to buy when the price goes down and sell once it raises again. The concept is as easy as it sounds like, however, it is harder in reality. If it was that easy to determine the prices, everyone would buy it when there was a major decrease in price. Hence, you need to be well aware of how and why the price fluctuates and always keep an eye on the market. Let’s say you have gold and the price went up, where do you sell it?

Selling gold is a difficult part of gold trading for beginners in South Africa. However, there is one highly recognized way to do it. Most of the gold dealers that you can buy gold from also have the sell-back option. Meaning that when prices go up, they are willing to buy it back from you. However, you need to be careful with the pricing as there might be better options for you than the one that your seller offers to you.

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gold trading in South AfricaAdvantages of trading physical gold

  • You can keep it as long as you want

One of the biggest advantages of owning physical gold is that you can store it as long as you want. If the price is stable for some time, you are not in a rush of selling it. Gold does not have high volatility, meaning that the price will not go down in a short period of time so much that it can damage your finances. At the same time in case it happens you can wait until the price goes up again and then decide whether you want to hold it or start to trade in gold.

  • You can easily sell it

Gold has one of the highest liquidity compared to other assets. What it means is that it does not matter what the price of the gold is, if you are willing to sell it there is always a good chance that people will be willing to buy it. Hence, you can convert it to money easily.

  • It is lucrative

As I have mentioned, gold is not very volatile, so the price of it does not fluctuate that much. However, if you own some amount of gold even the slightest in the price (if it goes up) will work well for you and will allow you to gain a decent profit. On the other hand, if the price goes down you can keep holding it until it increases again. But keep in mind that this strategy only works if you own a significant amount of gold.


trading gold in South AfricaDisadvantages of trading physical gold

Of course, everything has its disadvantages and so does investing in gold in South Africa or anywhere else. Here are some of the main drawbacks explained below.

  • Transportation

When you buy physical gold there are two major problems – logistics and storage. Let’s review both of them. When you are buying gold with the dealer, the price will usually include the transportation of the asset as well, and we have to admit that Gold isn’t of the very light weight.

  • Storage – where to save safely?

Where do you store gold? Especially when you are not buying coins but gold bullions and in a high quantity? Storing them in the house is the first option for many, however – it can be a good call for burglars and thieves. If you decide to store gold at your house you need to make sure that pretty much no one knows you have them and they are stored in a secure place that cannot be seen by others. It can be a locker that cannot be opened by anyone else other than you which is large and heavy enough to keep anyone from moving it around. Many investors are warned about storing gold on their own though, as it can be very risky.

Here are some tips for gold trade in physical form when it comes to safe storage – investors should store it in a special safe deposit box in a bank or store it with companies that offer storage services. It might have a disadvantage in terms of the storage fee but thanks to it you are able to guarantee safety.

  • Liquidity can be bad sometimes

While liquidity is an advantage of gold it can sometimes be considered as a downside as well. When you are buying gold from the dealer, the price of the gold is higher than the actual spot price, but when you are selling the gold to the dealer or any other party the selling price is indeed the spot price. This will not work well if you are planning for a short time investment. Hence, my tip for you would be not to trade with physical gold if you are not planning to make long-term investments.

how to trade gold in South AfricaAnother way to trade physical gold

It cannot be denied trading can be hard sometimes as the price of transportation and storage can make it more expensive for you. At the same time, you might find some hardship when selling it. The most efficient way of avoiding those complications is to consider online gold trading instead. Then, the online dealer won’t be sending you the physical gold, but rather will store it himself for you until you decide to sell it.

The main benefit of trading gold online is that you do not have to deal with the matters of storage, safety, and transportation by yourself. Also, if you do not want to buy or sell gold in South Africa but trade with the international dealer it will be much easier for you to do so virtually. It has disadvantages as well though, first of all, you still have to pay for the storage, and second, you do not have many options for selling it, rather than to sell it back to the dealer.

Trading gold on Forex

Gold is something everyone might want to have, why wouldn’t you want to have it and make profits when the price goes up? Unfortunately, not all of us can afford it. Making profits from trading on gold works the best when you have a high amount of it and you are ready for the long-time investments. But what if you do not have that much money? The answer is CFDs on gold.

Generally trading with physical gold is now considered an old-fashioned way of trading. Especially when you want to gain profits from it. Just imagine if you wanted to gain profits from the currency exchange and instead of entering online, you would go to the actual currency exchange point, exchange ZAR to USD, go back home, put it somewhere, and wait for the currency rate to change. Then you would have to go back to the same exchange point or search for the other one to exchange the money back. It does not sound like a smart thing to do right? The same works for gold. Forex gold trading in South Africa is easier, more profitable, and less time-consuming when you trade CFDs instead of actual gold. Let’s see how CFD trading works exactly.

CFDs on gold

CFD is a contract for differences, meaning that a trader when trading with CFD does not buy or sell actual gold. So how is gold traded without buying it? The trader is speculating on the changes in the price of gold. Obviously, to start CFD trading on gold you do not need to own the asset itself. CFD trading is done with the brokers that are offering CFDs alongside currency pairs. Nowadays, as CFD trading is very popular almost all of the brokers are offering it. Contracts for differences can be on many different assets, gold is classified as a commodity and is under the subcategory of precious metals. trade gold online

The idea behind gold trading online with CFDs is pretty similar to Forex or buying and selling the actual metal. You are making the assumption regarding the price movement and based on it you either sell it or buy it. To trade CFDs on gold you should understand how the CFDs work in general and at the same time you need to be aware of how the price of gold changes.

When trading CFDs you are exposed to the real price of it, however, it does not mean that you need to actually have that much money on your account. This is the beauty of CFDs trading, you need to have a fraction of the amount of money that is necessary to buy actual gold. The leverage gives you the possibility to open a trade with only part of the money as the other part is supplied by the broker.  When you open a trading position, if the broker sees that you are losing money it might give you a margin call to close a position or deposit more funds to keep it open. However, it will not always happen and you should control positions by yourself.

Trading Gold CFDsAdvantages of trading CFDs on gold

If you decide to trade gold online you have to understand the major benefits of it compared to the physical trading of gold. Take into account the aspects described below:

  • You do not have to deal with the actual metal itself, meaning that there will not be transportation costs, storage costs, and the need to protect yourself from thieves if you decide to keep it at home.
  • You do not need to have the amount of money in your pocket that is needed to buy actual gold, meaning that you can gain profits from trading even if you cannot afford it.
  • While making decent profits requires sizable and long-term investments trading CFDs on gold is a short-time investment and you can get the profits quickly.
  • It is easier to find a broker that has a good service and conditions for CFD trading rather than South African bullion dealers.

The dark side of CFDs trading is that like any investment it carries risk with it.

With CFDs, you cannot hold the position forever. When you own the gold you can have it buried in your backyard as long as you want it. With CFDs however, you need to be faster with your decisions. Keeping a position overnight or longer will accumulate additional charges. You need to be ready to close a position if your prediction was incorrect.

 how to start gold trading in South AfricaAfter all, should you start trading gold in South Africa?

As you can see you have three major ways how to do gold trading in South Africa. If you have enough money and are devoted to long-time investments and at the same time do not mind paying extra fees on transportation and storage, then you’re good to go. But if you want to avoid all of these hassles of transportation and storage – you can use the online platform, buy the gold from a dealer, and let them store it for you. Otherwise, if you want to make profits in a short amount of time without huge investments, you can try trading CFDs instead.

It is absolutely up to you which one you choose based on your own preferences and capabilities. The main thing is that you need to find and understand the gold trading tips in Forex or in the physical world and know how the prices change over time to make the experience profitable for you.


What is the best way to trade gold in South Africa?

There are few ways that gold can be traded in South Africa or anywhere else on the planet – online or offline in the physical world. Both of the methods of trading come with benefits and drawbacks, however, it is still recommended to choose online trading instead of a physical one, and here’s why: in order for your trade to be profitable you would have to buy gold in large quantities; then you would have to pay for the transportation of quite a heavy product and find the secure place for storing it. Your home will not work as storage, as it will be extremely unsafe, therefore you would have to pay extra money to safeguard it somewhere else. Therefore, it is suggested that you should instead trade with CFDs on the designated gold trading platform. Trading CFDs for gold works the same way as for any other product on the Forex market. You do not need to worry about storage and transportation and you do not need as much money to start trading with CFDs as you would in case of purchasing the physical gold.

What is the best time to trade gold in South Africa?

The price for gold does not change much over short periods of time, as it is more or less a solid asset in the market. However, whenever you notice the slightest drop in the price of the gold, take it as an alert to start looking for the gold dealers. You can buy gold as soon as there is a decrease in price and hold it until the price peaks again. Then you can resell it through various dealers and enjoy the profit. You should determine before hands if you would like to trade online or offline with gold because trading in a physical form comes with several limitations. If you don’t want to buy gold South Africa offers from local dealers, then you should instead consider trading online with the options from international gold dealers.

Is gold trading profitable?

Since gold has centuries of history as one of the most significant assets person or even a government can own, it will always be profitable to trade with gold. Some of the people who are experienced in trading even consider gold to be one of the most profitable assets out there, due to one main reason. Gold has a significantly high liquidity rate, meaning that it can be converted to cash almost any time and anywhere. Even if the price of gold drops very low or hits crazy-high, you can always find a dealer or buyer who will be ready to purchase it. Its high degree of convertibility ensures that you do not need to worry about finding the audience interested in purchasing it. Furthermore, if you would like to trade on CFDs instead of the actual gold, you should research how to trade gold in Forex, as it is one of the most popular markets for traders at the moment. Trading online with gold can be much more beneficial and is less costly for the holder.


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