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The Basics of Precious Metals Trading Explained

Commodities are great assets that you can use to get rich in the financial markets. Among commodities that traders love are metals. And metals trading is a very lucrative venture.

What are Precious Metals?

Metals are all over the world. Although some of them are quite rare, many are abundant in the earth’s crust.

Because of their properties, metals are ideal raw materials for building and manufacturing. The manufacturing sector makes use of metals to make cars, electronics, cookware, dental equipment, and many other items.

There are many kinds of metals for metal trading. Here are some of the most precious of them.


Gold is probably the most precious of precious metals. Speculators use gold as an investment vehicle.

Some manufacturers use gold in some electronics parts, most of the gold demand comes from jewelry manufacturers and traders.

Gold jewelries are also considered by many as actual investments.


Silver also serves in both electronics and jewelry sectors. Some traders collect this metal in the form of coins and bars.

Silver has the moniker “poor man’s shield” and it has played an important role in international trade for centuries.

Traders commonly use silver for portfolio diversification and hedging. Also, the silver price outlook depends upon the global financial environment and supply levels.


Platinum is part of the platinum group metals, and it is used for jewelries and catalytic converters for cars. Most of the time, investors invest in platinum in much the same way as gold and silver.


Palladium is another member of the platinum group metals. Like platinum, palladium is used to make catalytic converters for cars, electronic parts, and dental equipment.

This precious metal also gets huge demand from traders. Its trading volume is much higher than other members of the platinum metals group like rhodium, ruthenium, iridium, and osmium.

How to Invest in Precious Metals

There are a variety of ways to invest in precious metals. Here are some of them.

Commodity ETFs

There are exchange traded funds for all the precious metals. ETFs provide convenience and liquidity when it comes to buying and selling gold, silver, or platinum.

Stocks and Mutual Funds

Traders trade the shares of precious metal miners and use leverage on them to speculate on price movements.

Futures and Options

The markets for these derivatives are also very liquid. Leverage is also available, and you obtain the chance to achieve bigger trading results.


Coins and bars usually are for those who have safety deposit boxes or storage. Another downside to investing in bullion is that it’s inconvenient to hold and it’s very much illiquid.


Certificates also offer traders nearly all the benefits of physical gold ownership minus the inconvenience of transportation and storage.  However, when it comes to real disasters, certificates are still just paper.

Is Metals Trading for You?

Precious metals are great when it comes to fighting inflation. The retain their intrinsic value and they have no credit risks.

However, keep in mind that every investment, no matter how safe they are, carries their own inherent and unique risks. So, before you start buying gold coins and storing gold bars, make sure that you understand the risks of trading such assets.

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