Historically, metals, particularly precious metals, have always been considered a safe choice. This is especially true during times of economic turmoil, war and political uncertainty. As such, investment in precious metals and the metal trade resumed following the financial crisis of 2008 and focused on US and China trade issues.
Traditionally, precious metals, especially Gold, have always been considered safe investments. The stock market collapsed during the global financial crisis of 2008, in which the Dow Jones Industrial Average (a stock market index that includes 30 of the largest US companies) fell from a level of 13,264 to 7,062. This is a loss of 47% of its value in 15 months. However, during the same period between December 2007 and November 2008, Gold prices rose by 17%. From 2008 to 2012, the sharp rise in the value of Gold continued as the United States struggled with the recession caused by the economic and financial crisis, and the U.S. The Federal Reserve is its initial effort for quantitative (or monetary) easing.
Price of Gold Per Ounce
S&P 500 Index
Many financial experts have suggested diversifying the portfolio to include at least 10% to 20% (and sometimes more) of tangible assets (holdable assets) such as Gold, Silver, Platinum and Palladium bullion and bullion coins. In today’s uncertain political and economic environment, many well-known brokers offer trading of metals as a way to diversify their clients ’portfolios.
Trading Precious Metals
Precious metals are precious metals, which are rare and naturally formed. They have a wide range of commercial and industrial uses and are of high economic value. Their use as investment instruments is the reason why precious metals are the subject of intense speculation in commodity markets. Trading precious metals invests in these commodities as a kind of currency that holds value better than printed paper.
The precious metal trade focuses on four major metals, and they are: Silver (Ag), Gold (Au), Platinum (Pt) and Palladium (Pd). The scarcity and demand for these precious metals is why they are more important than base metals. There are secondary metal markets in various precious metals that can serve as buffers in case the price of Gold, Silver or Platinum falls below their performance standards. These secondary market products often have lower premiums and lower risk - but, like all financial investments, are not completely ‘safe’ investments.
The wide range of precious metals that can be invested gives traders access to a product that has historically rebounded rapidly.
However, there are important factors that an investor must understand in order to be successful in trading precious metals. Specifically here, the way how the market of precious metals differs from the stock market.
Stocks traded on the stock market are equities in which stockholders own a small or large portion of the company of the stocks they trade. Precious metals are commodities Investors hold physical product or profit from price difference in buying and selling metal when demand for metal increases and spot prices rise.
The stock market and precious metals exist and work independently of each other. Historically, the markets of precious metals have moved in the other direction of the stock market. This correlation gives investors a choice in case the stock market collapses.
There are several ways to invest in precious metals. You can buy physical metal in the form of bullion bars and bullion coins, or you can choose financial products such as stocks, futures, options, mutual funds and exchange-traded funds based on precious metal holdings. ETF).
Commodity ETFs
Common stocks and mutual funds
Futures and options
Bullion
Certificates
Trading precious metals has several major benefits as it offers unique protection against inflation. Because precious metals have a natural value, they do not carry credit risk and are thus not subject to inflation. There is real "insurance" against financial or political / military turmoil.
From a trader’s point of view, precious metals also provide low or negative correlation with other types of assets such as stocks and bonds. Even a small percentage of precious metals in your portfolio is enough to reduce volatility and risk as they offer great price increases and potential for profit.
Gold Spot Price
The current (daily) price of Gold is known as spot gold price or spot price of gold. This is the Gold price at the time of the trade or transaction and not at a future date. Gold spot price is in constant volatility and may be driven by many factors. Typically, spot Gold is quoted at the price per ounce using the U.S. Dollars. Quotes indicating Gold spot price in other currencies are also available.
The value and thus the price of gold is determined by the market 24 hours a day, seven days a week. Gold is traded mainly as a sentiment, which means that its price is less affected by the laws of supply and demand. The actual Gold spot price is derived from the nearest contract month for Gold futures with the largest volume. It can be the nearest month or front month, or it can be one or two months away.
As a primary precious metal, investment demand for Gold is often greater during troubled economic or geopolitical times. From early April 2001 to early September 2011, the Gold spot rose from an estimated low of $ 250 per ounce to a high of nearly $ 1,900 per ounce - an increase of over 600% in about 10- 1/2 year. Interest rates and monetary policy can also have a significant impact on Gold spot price. Gold can also provide a good return on investment in the short term when interest rates are too low, as it lowers the value of the opportunity to handle Gold at low rates.
Spot Metals
Spot metal trades consist of exchanging spot metal - Gold or Silver - for one currency. For example, a trader may choose to trade Gold in British Pounds (XAUGBP) or Silver in Euro (XAGEUR).
Part of the potentially successful spot metal trading is staying up-to-date in the metal markets by monitoring the performance of several key indexes that monitor the sector. Many spot metal indices provide a good basis for investment demand in the sector as they measure the performance of metal futures, such as S&P GSCI Precious Metals Index, S&P GSCI Industrial Metals Select, UBS Bloomberg CMCI Industrial Metals Index Total Return and the DBIQ Optimum Yield Industrial Metals Index Excess Return.
Additional market pricing and news references in both the priced and base metal sectors are also available for investors. It is also recommended to use spot metal price charts for tracking Gold and Silver spot prices to monitor market movements.
Trading spot metals represents an opportunity for investors and traders to diversify their financial holdings to ensure that they are at least partially represented by a safe option. Some of the regulated brokers such as Alpari offer additional instruments such as Contracts for Difference (CFDs), where they can choose long-term or short-term positions in Gold and Silver. CFDs also allow traders to make assumptions on the price of metals without having to buy shares, ETFs, futures or options. Customers deposit funds with the broker, which serves as a margin. The value of a CFD comes from the difference between the price of metals at the time of purchase and the current price.
The ongoing uncertainty in financial markets is part of what is driving the demand for the trading of metal spots. Precious metals are often extremely effective against the depreciation of fiat currencies, and because they have a natural value, they are simply not valued as a medium of exchange. Thus, spot metals are becoming more popular with traders around the world. In times of market uncertainty, people often turn to the security offered by precious metals, where Gold and Silver are seen as the best protection against inflation. Like all other instruments in financial markets
