Investing in investment-grade precious metals is one of the best strategies. The U.S. Dollar has lost over 50% of its value against major global currencies like the Euro and Yen. Investing in metals like silver and gold can be a smart move to preserve your purchasing power and balance sheet.
But to profit from trading in precious metals such as gold, silver and platinum, you need a good understanding of the market and various trade practices. While it might take time and effort to find the right trade style, having a solid understanding of the market is crucial because it can help you make informed decisions. Trading in the precious metal market requires much knowledge of reading market charts from reliable websites such as https://www.goldbullionaustralia.com.au/live-charts-prices/. You also need to know how far your trade will move before you decide whether to buy or sell. This article will help you understand a few aspects of the precious metal market.
Understanding The Basics Of Precious Metal Market And Trading:
Three main types of precious metals are gold, silver and platinum. Gold is the most popular, with around 80% market share. Silver is second in popularity at about 15% market share, and platinum is third at about 5% market share.
Precious metals prices are determined by the supply and demand for those metals and the supply versus demand for other commodities like oil and wheat.
The price of gold depends on its scarcity, industrial use, investment demand and monetary uses. It’s also an excellent way to hedge against inflation.
The price of silver is based on its industrial use. Silver doesn’t need refining as much as other metals, so it costs less.
Platinum has minimal industrial use, so its price mainly depends on how much people want to buy it for jewellery or investment purposes rather than anything else like gold or silver.
Factors To Consider When Trading In The Precious Metal Market:
The precious metal market is volatile and fast-paced. It is highly speculative, meaning prices can fall or rise quickly.
The following factors should be considered when trading in this market:
- Price Volatility: The price of gold, silver and other precious metals can change quickly. This makes it hard for investors to predict how much their investment will move up or down. Therefore, it might be better if you only invest small amounts of money at a time so that you won’t get carried away by the current trend in the market.
- Market Liquidity: The more liquid a market is, the easier it will be for traders to freely buy and sell commodities without worrying about not being able to find someone who wants their stakes at the given price point. In addition, if there are no buyers for a stock because nobody wants to buy more shares than there are currently on offer, then the market can be considered low on liquidity. It is best to stay out of the market when the liquidity dips.
Trading in the precious metal market is lucrative only if you have the proper knowledge and trading style. Before you begin your investment journey, it is best advised to learn more about common trade practices and gain some hands-on knowledge before jumping into full-scale trading.