Nigeria has many mineral resources, in this article, gold will be the centre of attention. Global brands, other African countries, and countries abroad demand gold because it’s a component used for different services and jewellery production.

Among the global brands that need the gold from Nigeria for services are communications companies Samsung and Apple, just to name a few. Gold is used in making many different electronic devices and smartphones. This is why gold trading is a viable investment with a future because the world needs this resource that enriches other businesses. 

Generally, there are two ways of investing in gold. The first method is buying gold physically, and the second is investing in gold ETFs. EFT stands for exchange-traded fund, and it’s an easy way to enter the investment markets. It contains well-defined stocks, bonds, or commodities that are put into the fund and listed on the exchange, allowing everybody to use them.

Another selling point of trading in gold is that it’s a conventional way of preserving wealth because it can be passed down from one generation to the next. Other ways of investing in gold include gold derivatives like futures, forwards, and options. Investing in gold mutual funds, CFDs, or mining companies is also possible.

Importance Of Gold EFTs

Gold ETFs allow investors to invest in gold without owning it physically. They are securities that monitor the price of gold and trade it like any other share on the stock exchange. Many people prefer gold ETFs because when physically buying gold, they’ll have to pay a lot for insurance and adequate storage. Gold ETFs are easier to trade, making it even simpler to invest in gold.

Gold ETFs have lower costs and remove the hassle of paying a lot for insurance and keeping it secure. They can also be liquidated easily, meaning investors can quickly start or leave positions in gold ETFs.

The biggest gold ETF that trades on the NGX exchange is Newgold ETF. In West Africa, Nigeria is the top ETF market and among the biggest in terms of the products it lists, market capitalization, and turnover value. 

How To Start

The first important step in trading gold in Nigeria is to find a qualified stockbroker and open a brokerage account. This investment account allows an individual to buy or sell bonds, mutual funds, stocks, and ETFs. It should offer trading options for gold ETFs listed on the Nigerian Stock Exchange.

Consider Real Interest Rates In The Long Term

When considering the long term, know that the real interest rate of gold trading raises the price. This will result in higher profits for long-term traders and investors but the market can become very competitive. 

Try buying gold when the yields are below 1% is the supportive gold price. When it’s lower than 1%, this means the profits aren’t too high, and there’s space for growth in the future. It’s better to sell when it’s over 2% because the return on gold investment in the short-medium term rarely passes 2%; it usually goes down when over 2%.

Buy When At The Support Level

The support level is when the price stops failing and goes back up again. This is a useful trading strategy because, in addition to gold, the buy and sell points of other assets are given. When buying gold at the support level, the prices will continue to increase after that.

Always Be Aware Of The Gold Chart 

Gold charts have cycles and critical moments that help to understand the gold market. Watch the market when it’s cyclical to understand its future position. Cycles are beneficial for short—and long-term trading. This information will help to inform buy and sell decisions.

Concentrate On Small Trades

As a beginner, it’s better to focus on small trades first. Try to avoid big losses by choosing trades that can procure a reasonable profit. Extending the position size is possible if the goal is a long-term investment.

Utilise Trendlines

Trendlines are used to predict future price changes by joining the price points. There are two types of trendlines: downward and upward. Trendlines help traders gain a better insight into the investment value’s direction.

Use The Recent Highs And Lows For Support And Resistance Levels

Contrary to a support level, a resistance level occurs when prices cease to increase and instead fall. The power of the support or resistance level is the same as that of levels created as an increasing or decreasing trendline.

Don’t Make Decisions Too Quickly

Always wait for confirmation on a market breakdown before making a decision. The breakdown is confirmed if the final price is above or below the critical price level before the breakdown takes place. When a breakout is disapproved, then the market is falling (bearish) but when a breakdown is disapproved, it means the market is going upwards (bullish).