Precious metals are by far one of the most sought trades today, whether they’re tangible or not.
There are two main ways to trade metals and it’s through tangible trades and intangible trades.
Tangible trades are when you physically own an asset. And for intangible trades, this is when
you only own the underlying value of an asset.
This trade stays relevant because people don’t only keep them to trade and invest in but also to
wear and use. Gold, silver, palladium and platinum are metals used for various things, but
mostly for jewellery. Because of this, the metals market stays active and valuable.
This is also such a great trade to get into because precious metals including base metals are
always in demand! So whether you’re a starting trader or just looking to switch to a new trade,
consider trying out trading with precious metals!
Every trader already knows how to trade tangibly, but you should also know how to trade
intangibly with the use of derivatives! So for you to be at the top of your game, below is
everything you need to know about trading precious metals with CFDs:
What are precious metals?
To fully understand the whole concept of trading with precious metals, you need to know what
these are. Precious metals are metals that have high economic value and are hard to come by.
There are 8 types of precious metals such as gold, silver, palladium, platinum, iridium, rhodium, ruthenium and osmium.
Among all the precious metals, you’d think gold is the most valued but it’s actually rhodium
when it comes to rarity and price. Last June of 2022 this metal was sold for a whopping $14,000
an ounce.
But when it comes to trade, only 4 kinds of precious metals stand in the spotlight; it’s Gold,
Silver, Platinum and Palladium. All four are used in different ways and are also priced
differently.
How do you identify precious metals?
Due to precious metals being, well, precious, various people start to sell fakes to fool buyers
into thinking they’re real. So as a starting investor, it’s essential to know how to spot real
precious metals from replicas.
One efficient way to tell if a piece is real is through hallmarks. Hallmarks are markings on the
metals that indicate their weight, purity and other factors to help you identify what they’re made
out of. These are usually found near clasps, in the jewellery’s interior or in a discreet spot.
Another way to identify if a precious metal is legit, you can also bring it to an expert. They’ll be
able to identify everything about a piece like its weight, purity and so on.
Where are most precious metals found?
Most of the precious metals come from countries around the world such as the United States, South Africa, China, Russia and Canada. Although other parts of the world produce precious
metals, these 5 places are the ones that supply them the most.
What affects the price of precious metals?
As a starting precious metals trader, you must know what affects the price value of precious
metals. This is essential since this can affect your trading strategy and overall profit. So there
are 6 factors that can affect the price of precious metals such as:
•Supply and demand.
•Industrial output.
•Economic uncertainty.
•Interest rates.
•Strength of the USD.
•Quantitative easing.
How do I trade with precious metals?
Now you know a good sum about what precious metals are, you can now learn how to trade
them. Just like any other trade, you speculate on their market value; whether they’ll rise or fall
with the use of derivatives. The most popular kind of derivative used for trading metals is CFD, where you trade futures, options and spot prices.
One of the benefits when trading metals through CFDs is that you don’t need to have a physical
hold on the assets. So there is no need for insurance, storage and so on. All your effort and
focus can be mainly on speculating.
To start, choose a trading platform. A platform acts as a medium that connects you to the
world of trade. Good platforms have demo accounts, training material, quality trading tools,
analytical tools, interfaces and low fees.
Take away
Now you know a good amount about what precious metals are, you can now make an accurate
decision if this trade is for you or not. Precious metals are one of the sturdy trades around since
their market is pretty concrete, making it less volatile compared to other trades. So if you’re
looking for a trade to get into, this is a trade to definitely consider.
