Precious Metal Investing Info
Unlike brand name products in the world, commodities are goods that have a universal price that is good worldwide. Gold is one of the finest examples, as it has the same price per ounce in China or Brazil – where the price of a toaster or a pair of running shoes would vary depending on the brand and the region in which it’s sold.
Commodity trading is a very common form of investment because there is no shortage of commodities in the world. They are not restricted to pure elements like gold and can be refined from any raw element. That means that petroleum and oil are both commodities as are precious and industrial metals, eggs, and other agricultural products. Precious metals are often sought for investments because of their high value and never-ending demand.
Why Invest in Commodities like Precious Metals
The primary benefit of precious metals is that the profits from precious metal investing are not based on business strategies, company productivity or the overall actions of a single company or nation. Gold is a commodity that isn’t likely to disappear any time soon. Stock in a failing car manufacturer however is not likely to survive a century.
Another great reason is simply for the fact that the value of precious metals, especially Gold, continues to climb. Over a period of 20 years, from 1991 to 2011, gold has gained substantially. In 1991 gold was valued at approximately $250 per troy oz. In early 2011, gold was valued at approximately $1600.00 per troy oz.
Gold is in a unique position as popularly traded commodity because over thousands of years it has never lost its intrinsic idea of value. Essentially, every culture that has ever encountered gold has always placed some form of worth or value upon it. As a trading commodity, gold is valued because it is a strong hedge against inflation, acting as the essential commodity while holding its strength despite economic fluctuations. Unlike silver which is traded by the ounce, gold is typically traded in bullion form.
Investing in Silver
Like Gold, silver is traded in troy ounces. While silver is a precious metal, its value is far lower in price per ounce which makes it one of the more affordable metals for traders and new investors. The standard contract size for silver is 5,000 ounce. Trading silver, as with trading of any commodity, requires an account through a broker that is registered with Commodity Futures Trading Commission.
Platinum is one of the most expensive commodities on the market. It’s the natural rarity of the metal that drives up the value, with the average price of platinum in line with Gold (and often surpassing it). Currently, South Africa is one of the largest producers of the precious metal.
As the demand for these metals continues to climb, so too will the value for investors. With technological advances, precious metals are being used in more than just jewelry. Gold is used in circuitry and a variety of other electronics. Platinum continues to be used heavily by the automotive industry – with 43% of its use. Investors typically watch trends to see which metals are in growing demand, acting as a tool to help determine where initial investment should be placed and in which precious metal to invest in for expanding a portfolio.
This information is for educational purposes only and in no way guarantees your profitability by trading the equities mentioned. See Terms and Conditions.