# Gold Products, Brokers and Account Safety Distinguish bullion, ETFs, futures, CFDs and token proxies. Use this workbook alongside the course. Write your answers before opening the solutions. Practical work is self-reviewed; scored knowledge checks are in the Academy. ## 1. Product choices ### Physical ownership Physical gold involves the ownership and storage arrangements stated in the purchase agreement. Allocated holdings identify particular metal; other arrangements may instead create a claim against a provider. Verify the documents rather than assuming that an account label establishes ownership. ### Fund exposure A bullion fund offers shares in a legal structure with its own custody, expenses and redemption terms. A retail shareholder may not have the same redemption rights as an authorized institutional participant. Read the prospectus before assuming that a share can be exchanged for a bar. ### Exchange-traded derivatives Futures are standardized contracts with expiry and settlement rules. Their notional exposure can be much larger than the collateral posted. A retail gold CFD is a separate contract with a provider; exchange futures specifications cannot automatically be applied to it. ### OTC and token counterparty risks Product selection starts with the intended use: holding an investment, hedging a future purchase or practising short-term execution. Compare exposure, currency, liquidity, total costs and possible losses. The instrument with the smallest deposit is not necessarily the least risky. ### Worked example A learner sees two products labelled gold. One charges annual fund expenses and has no derivative margin in an unleveraged cash purchase; the other is a leveraged OTC contract with overnight funding. Equal price changes can produce very different cash-flow demands. ### Independent exercise Create a comparison table for a physical holding, a bullion fund and a leveraged contract. Identify ownership, funding, exit mechanism and the document needed to verify each field. My inputs and assumptions: My calculation or decision: Evidence that would change my conclusion: ## 2. Account terms ### Client asset arrangements Account terms define the legal entity serving the customer, account currency, transaction rights and charges. Save the applicable version and date. A trading platform brand may be used by several entities with different terms, so the software name is insufficient identification. ### Margin and liquidation A quoted spread is only one cost. Commissions may be per side, per contract or a percentage; financing may depend on holding time and direction. Compare costs using the same hypothetical size and holding period, and state whether the figures are estimates. ### Financing and rollover Leverage changes the ratio between exposure and collateral. Provider liquidation thresholds may refer to equity, margin level or other definitions. Model the stated threshold using the provider's formula rather than substituting a familiar formula from another account. ### Withdrawal and dispute terms Withdrawal, conversion and inactivity terms can affect access to funds and total cost. Identify any conditions, processing steps and applicable limits before funding. Unclear terms should remain an unresolved comparison issue, not be filled with assumptions from advertising. ### Worked example Provider A charges 2 per side and provider B charges 5 round trip for an otherwise identical hypothetical transaction. A's stated commission is 4 round trip. Comparing 2 with 5 would mix one-side and complete-trade costs. ### Independent exercise Normalize three example charges: 3 per side, 7 round trip and 1 per contract per side for four contracts. Ignore other costs only for this calculation. My inputs and assumptions: My calculation or decision: Evidence that would change my conclusion: ## 3. Provider checks ### Jurisdiction and regulator Identify the precise legal entity and jurisdiction before checking a provider. A similar trading name can belong to an unrelated company. Use an official regulator's register appropriate to the activity and jurisdiction, rather than a link supplied by an unsolicited message. ### Registration versus protection Registration may authorize specified activities and may have conditions. It is not a guarantee of profitability, product suitability or the absence of misconduct. Compare the authorized entity, website and contact information with the entity asking for funds. ### Fraud warning signs Look for mismatches: a cloned website, payment to an unrelated beneficiary, pressure to act quickly or a demand for additional payment merely to unlock a withdrawal. A single marketing statement cannot resolve these inconsistencies; keep a written verification trail. ### Account security and recovery Account safety also includes personal operational controls. Use unique credentials and supported multifactor authentication, secure recovery methods and official support channels. A request for remote control of the device or secrecy from your bank deserves particular scrutiny. ### Worked example A message uses a genuine firm's name but sends a link to a slightly different domain and requests payment to a private account. The existence of the genuine firm does not validate the message or the beneficiary. ### Independent exercise Write a verification checklist for that message without clicking its link. Include entity identity, official contact details and the payment beneficiary. My inputs and assumptions: My calculation or decision: Evidence that would change my conclusion: ## 4. Compare product documents ### Ownership versus price exposure Ownership and exposure are separate questions. A contract can track a gold price without granting title to metal. State who owes what to whom, what triggers payment and what rights exist if the arrangement ends. ### Custody and counterparty arrangements Custody and counterparty arrangements identify where assets are held and whose obligation is relied upon. Segregation, insurance or protection claims have definitions and limitations. Read the actual provisions; a general label does not establish full recovery in every failure. ### Financing and rollover schedules Financing and rollover schedules determine costs and operational dates over the intended holding period. A futures roll changes contracts; a provider's daily funding charge is a different mechanism. Neither should be treated as a harmless chart-label change. ### Record jurisdiction-specific questions for a qualified adviser Legal and tax questions depend on jurisdiction, residence and the product. The correct beginner skill is identifying the question and collecting accurate documents for qualified advice. A generic trading lesson cannot establish a personal tax treatment or legal entitlement. ### Worked example A learner intends to hold a contract through a known expiry. The chart appears continuous, but the actual position belongs to a dated contract. The learner must check expiry and settlement obligations rather than assuming that the chart rolls the position automatically. ### Independent exercise Prepare a dated product fact sheet listing the legal entity, exposure units, financing convention, expiry if any, and unresolved custody or jurisdiction questions. My inputs and assumptions: My calculation or decision: Evidence that would change my conclusion: ## Course project Compare product terms and verify a provider using the relevant official register. ### Self-review rubric - Concepts and reasoning: 25% - Calculations, data and evidence: 30% - Process and risk controls: 25% - Limitations and communication: 20% Record one correction and one next practice task. This rubric is not automatically graded. ## Worked solutions ### Exercise 1 Use purchase and custody agreements for physical ownership, the fund prospectus for fund rights, and the provider's contract terms for the derivative. Mark unknown fields as unknown; do not infer them from the product name or chart symbol. ### Exercise 2 The round-trip charges are 6, 7 and 8 respectively. This only compares the listed commissions; spreads, financing and conversion could reverse the total-cost ranking. ### Exercise 3 Navigate independently to the relevant official register and verified company contact. Compare the domain and beneficiary, and ask the genuine company through its official channel. Do not treat a copied registration number as evidence that the sender is authorized. ### Exercise 4 The fact sheet should cite the provider or exchange document beside each field. Unknown terms should block conclusions that depend on them. A continuous chart is not evidence that a broker has rolled an actual position. ## Further reading - https://www.cmegroup.com/education/courses/introduction-to-futures - https://www.investor.gov/introduction-investing/getting-started/asset-allocation