A contract on the price, not on any gold

Why a contract on the price has no purity at all

A karat mark is a property of metal. A contract for difference has no metal, so it has no karat mark, no purity, and no price per gram of fine gold. It is a contract on a number: the market price of gold, quoted in a currency. The contract is settled in the account's currency and carries no claim on any bar or piece. That absence of metal is the whole difference. The pages on this site about karat marks are about jewellery and the gold inside it. The broker account is about a price series and a margin. Mixing the two is the most common mistake a reader makes, and the most costly.

What changes when nothing is delivered

When gold is bought as jewellery, a gram of metal leaves the shop in the buyer's hand. When a contract for difference is opened, no gram leaves anywhere. The contract is a position, marked to market, and it can be closed for a gain or a loss. There is no delivery, no storage, no hallmark, and no making charge. The absence of delivery also removes the resale question. A piece of jewellery can be sold back to a counter. A contract for difference is closed with the broker, at the broker's price, and the result is cash. The two transactions share the word gold and nothing else.

The paperwork worth reading first

Opening an account requires identification and takes a day or two. A practice account exists and costs nothing. Those are the only facts about the account itself. Everything else is in the broker's documents, and those documents are the place to look before opening anything. The key documents are the terms of business and the risk disclosure. The terms state what the contract is, how it is priced, and what the broker may do. The risk disclosure states what can go wrong, including the loss of the entire deposit. No page on this site can read those for the reader, and no page should.

FxPro is not authorised by the Dubai Financial Services Authority. Its Dubai entity, FxPro Global Markets MENA Limited, held DFSA authorisation until it was withdrawn on 27 February 2020, and the DFSA public register still shows it that way. An account is therefore opened with a company regulated outside the Emirates - the group is authorised by the FCA in the United Kingdom and CySEC in Cyprus - so a resident here is dealing with a foreign firm and the protections of a locally licensed one do not apply. Nothing on this site is investment advice.