A gold contract with FxPro

A contract on the gold price, beside a tola that has to be weighed and sold back

A tola of physical gold is a piece of metal that must be weighed, hallmarked and stored, and when it is sold back the buyer deducts a margin. A contract for difference with FxPro is a position on the gold price: it is settled in the account's currency and carries no claim on any bar or piece of jewellery. The two are different assets with different risks.

The contract moves with the world gold price, not with the Karachi sarafa close, so the gap between the two is not something a contract holder can arbitrage. Opening an account requires identification and takes a day or two; a practice account exists and costs nothing. This site is not the broker and takes no money from the reader.

Why karat and making charges have no meaning in a contract that delivers nothing

Karat is a measure of purity in a piece of jewellery, and making charges are the jeweller's fee for shaping it. A contract for difference delivers no metal, so there is no karat to test and no making charge to pay. The price quoted is for the metal itself, and the account is denominated in the trader's currency.

A buyer who wants a 22 karat bangle is buying a piece of jewellery, not a price exposure. A contract for difference is a price exposure with no piece attached. Confusing the two is the most common mistake a first-time account holder makes, and the terms of the account make the distinction plain.

What to read in the terms before an account is opened from Pakistan

The account is with FxPro, an international broker. This site is not the broker and takes no money from the reader. A reader in Pakistan should read the terms that apply to their country of residence: the costs of holding a position overnight, the margin required, and the circumstances in which a position is closed automatically.

A contract for difference can lose more than the amount deposited, and a practice account costs nothing but does not prepare a trader for the behaviour of a live account. No profit is promised, and no safety is claimed. The terms are the only document that binds the broker, and they should be read before any money is sent.

FxPro is not licensed by the Securities and Exchange Commission of Pakistan. An account is opened with a company regulated outside Pakistan - the group is authorised by the FCA in the United Kingdom and CySEC in Cyprus - so a resident here deals with a foreign firm and the protections of a locally licensed one do not apply. Sending money abroad for trading is subject to State Bank of Pakistan foreign exchange rules. Nothing on this site is investment advice.