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How to Trade Precious Metals
Written by: PaxForex analytics dept - Wednesday, 13 September 2017 0 comments
Precious metals, and gold in particular, have always the symbol of wealth. As far as prehistoric times, when gold was used in bartering, and throughout the centuries, whether in the form of coins, or bars and billions of fixed purity and weight, gold has been a valuable and much sought-after asset. When economic times are uncertain, many people turn to precious metals as an investment. Whether or not the times are worrisome, portfolio diversification is critical, and adding precious metals can assist in your pursuit of that strategy.
Precious metals futures markets offer investors access to everything from the computer industry to construction to macro-economics and geopolitics. Gold futures, silver futures, and other precious metals futures bring in a broad range of participants from commercial hedgers, to central banks to institutional traders and individuals looking for opportunities and diversity. Whether you’re looking to invest in gold futures, silver futures or even platinum futures, precious metal futures are sometimes volatile and unpredictable. However, this means they also offer flexible and creative trading opportunities.
Investing in precious metals can be a good way to shield your investment portfolio from the effects of inflation. Monetary policy employed to combat recent recessions has often involved the inflation of currencies. Lack of faith in the dollar has resulted in the devaluation of cash assets and the rise of commodity prices. Price
volatility is always a concern for precious metals investors. The discovery and sale of large precious metal reserves can increase the supply overnight, leading to sharp drops in price. Additionally, if you invest in physical metal such as gold coins or bullion, you need to protect them in a bank vault or safe.
Some brokers are already set up to help you trade physical commodities, so make sure to double-check before setting up a whole new account. Besides currency exchange trading, investing in gold and other precious metals long-term is a worldwide popular way of portfolio risk management during times of inflation or economic/political uncertainty. One of the main purposes of investing in precious metals futures is risk mitigation: given the ability to the contract buyer and seller to fix prices or rates in advance for future transactions, they can both ensure against drastic or sudden price movements that may cause increased losses.
A broker will provide you with access to the various investment vehicles that you can use to invest in precious metals. Brokers have the knowledge and experience to help you make better investments. Such an account will allow you to access precious metals markets without having to pay an agent to execute trades for you. This is almost always cheaper than using a personal broker but forfeits the advice and expertise of an experienced agent.