Trading of Precious Metals

Trading of Precious Metals

Trading of Precious Metals

A metal which is rare and occurs naturally having chemical element of high economic value is termed as a precious metal. The precious metals are chemically less reactive than most of the elements.

The precious metals are highly ductile and have a high lustre quality. Historically, precious metals were as important as the currency of any country but now they are mainly regarded as the best commodities for the investment industry. The best known precious metals are the coinage metals, gold and silver. Gold and silver are the metals which are on top of the list of precious metals. Although both of them have their own industrial uses, they are majorly known for their uses in art, jewelry, fine jewelry and coinage. The demand for precious metals is always high not only by their practical use but also by their role as investment. Historically, precious metals have commanded much higher prices than the common industrial metals.

Precious metals like Gold and silver are traded globally on continuous basis from Monday through Friday, during the working week. The two key markets on which the metals are traded on are firstly the physical spot market (link “spot market” to blog on spot prices of precious metals) and secondly the futures or option contracts on financial exchanges. Although there are different ways to participate in the markets for these metals, most noticeably are via Exchange Traded Funds (ETFs) and Contract for Difference (CFDs). These vehicles themselves hold the strength to act as alternates for the wholesale markets. The value of gold is determined by the market 24 hours a day, basically all seven days a week. Gold predominantly trades as a function of sentiment, its price is less affected by the laws of supply and demand. To put it in more simple words, when the hoarders feel like selling, the price increases. When they want to buy, new supply is quickly absorbed and the price of gold witness an upliftment .Several factors which basically account for an increased desire to hoard the yellow metal are systematic financial concerns, inflation, war or political crisis.

The preference for the purchase and ownership of precious metals is increasing as a means of long-term investment and it has surprisingly increased in the recent years. It equally presents opportunities for those who are interested in short-term investment because derivatives and exchange-traded contracts do not focus much on the capital strength and offers a simple and easy way to grab a position on the price movements of gold and silver.

DISCLAIMER:The views expressed in this blog are those of the author and may not reflect those of Jindal Bullion Limited. The author has made every effort to ensure accuracy of information provided; however, neither Jindal Bullion Limited nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Jindal Bullion Limited and the author of this article do not accept culpability for losses and/or damages arising from the use of this publication.

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