How Gold Futures Work
A COMEX gold futures contract (GC) represents 100 troy ounces of gold. You do not pay for the full value of the metal — you post margin, a good-faith deposit set by the exchange that is typically a small fraction of the contract's notional value. That leverage cuts both ways: a modest move in the gold price produces a large percentage gain or loss on your margin.
Futures positions are marked to market daily. If the market moves against you, you must add funds or the position is liquidated. Contracts expire on a schedule, so a trader who wants to stay long rolls the position to a later month, usually for a small price difference between the two months. On the other side of the ledger, futures offer tight bid-ask spreads, deep liquidity nearly around the clock on weekdays, and low commissions per ounce of exposure. Futures trading involves substantial risk of loss and is not suitable for all investors.
How Physical Bullion Works
Buying bullion means paying the full price plus a dealer premium, then arranging storage — a home safe, a bank safe-deposit box, or a professional depository. There is no leverage, no margin call, and no expiration date. You can hold the same bar for thirty years and never make another decision. The trade-offs are real: a wide bid-ask spread at the dealer, premiums over spot that vary by product and market conditions, and the ongoing logistics and cost of secure storage and insurance.
Popular forms include one-ounce coins like American Eagles and Maple Leafs, and bars ranging from one ounce to a kilo. Larger bars carry lower premiums per ounce but are harder to sell in pieces. Whatever you buy, purchase from an established dealer and understand the buy-back policy before you need it.
Which One Fits You
Choose futures if you are trading a view on the price with a defined risk plan and you can manage margin honestly. Choose bullion if you want a long-term store of value you control outright, outside the financial system, and you will not be shaken out by a volatile month. Many investors hold both: bullion as a core holding and futures for shorter-term trades or hedges around it. If you are unsure which fits, talk it through with a broker before you risk a dollar — that conversation costs nothing.