Gold futures are a great way to get gold at a cheap price. Futures can also be a bit dangerous since they lock you in for a price that you must pay or accept at some point in the future. Although futures were created in Japan to protect buyers and sellers from large swings in the supply and demand for rice, they are used for hundreds of commodities around the world today, including gold. You do not have to actually own the commodity in order to sell a futures price to someone; you can simply buy the shares and transfer them to the other entity involved in the contract electronically.

The way futures work is quite simple. You agree to buy or sell a commodity at a given price at some point later on. It can be a year from now, or a few months. The length of time is determined by the entities entering the contract. A little bit of strategy is necessary if you wish to be profitable in the futures business. If you think the price of gold is going to drop, you want to enter into a future where you can secure a high selling price. This way, you can buy the gold cheaply, and then sell it at the agreed upon high price once the contract expires. If you think gold is going to escalate in value, you will want to lock in a contract with you buying the gold at a cheap price and selling it at a higher price.

Futures for precious metals and other commodities taking place within the United States are most traded through the Chicago Mercantile Exchange.