FUTURES AND OPTIONS TRADING
Futures contracts constitute an efficient way to purchase and take delivery of metal in lots of 100 ounces for gold and 5,000 ounces for silver. It is one of the cheapest ways to acquire and take delivery of metal for investors who have access to a broker that allows for physical delivery (most brokers do not).
Buying futures contracts and rolling them over does not, however, constitute a viable alternative to holding bullion. The investor who acquires his bullion in this way also should have sufficient capital on margin, given the high volatility of precious metals prices. The Wise Investor can acquire his metal on the futures markets and get it delivered to his allocated account held with a non-bank professional vaulting company.
The main commodity exchanges for gold and silver are COMEX in New York, TOCOM in Tokyo, and MCX in India. Gold also can be traded on other commodity exchanges, including the Chicago Board of Trade, Istanbul Gold Exchange, Chinese Gold and Silver Exchange Society, the Shanghai Gold Exchange, and Dubai Commodity Exchange. Only a small percentage of the futures market turnover ever comes to physical delivery of the gold or silver represented by the contracts traded.