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A Guide to Trading Metals


Precious metals such as gold and silver have been recognised as valuable metals for a long time, but gold and silver are not the only ones out there for investors. Gold trading offers lots of opportunities for investors, but there are also other metals that you can add to your portfolio such as platinum and palladium.

There are many good reasons why you should invest in precious metals and also many ways to invest. Learn more about the different types of precious metals, what affects their value and whether they are a good investment.

Gold is seen as a safe-haven asset during times of market uncertainty

Gold is unique for its durability and ability to conduct both heat and electricity. It has some industrial applications in dentistry and electronics, but it is mainly used for jewellery and as a form of currency. The value of gold is determined by the market 24 hours a day, seven days a week. When banks and money are considered as unstable, gold is considered by investors to be a safe-haven asset during times of market uncertainty.

The price of fluctuations of silver are more volatile than gold

Due to its conductive, anti-bacterial and malleable properties, silver is used in jewellery and in industry. In contrast to gold, the price of silver moves between its perceived role as a store of value and its role as an industrial metal. Due to this, price fluctuations in the silver market are more volatile than gold.

How to trade or invest in precious metals

You can trade precious metals by speculating on falling or rising prices with financial derivatives like CFDs. For instance, you can trade CFDs on gold and silver in any direction you think the markets will go, short or long. You will be trading on these price movements, so you will not actually own the underlying assets.

Another way to invest is in commodity stocks and exchange-traded funds (ETFs). ETFs provide a convenient and liquid means of buying gold, silver or platinum, but you do not have access to the physical commodity.

Stocks enable you to gain indirect exposure to precious metals by buying shares in the companies involved in their production and use. ETFs allow you to speculate on a diverse collection of assets in a single investment, and commodity ETFs will be set up to closely follow the price of that metal in the underlying market.

What affects the price of precious metals?

Different factors have an effect on the price of precious metals. Let’s consider these factors below:

The advantages of investing in precious metals

Are precious metals a good investment?

Precious metals, are regarded by many investors as a good investment, especially gold which is known as a safe-haven asset. Investors will often invest their money in gold during times of market uncertainty. Also, because of their applications in jewellery, electrical components, car parts and industry, the demand for precious metals is usually high. The rule to being successful with precious metals is knowing your goals and risk before investing.

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