Trading Gold and Silver

Gold and silver are some of the world’s leading precious metals that have been traded for thousands of years. Gold continues to lead the global trade for its value as gold, remains a chief form of worldwide currency, is highly valued for its use in jewelry and is sought after for its properties as a metal. Gold never rusts, is safe from corrosion and is a conductor for electricity and heat. Following gold is silver.

Silver is used for jewelry, currency and in coins, is often sought after for use in electronic devices and photography (though this has declined due to digital cameras). Though gold is a conductor for electricity, silver has the highest electrical conductivity of all metals. There are several ways to trade and buy gold and silver including methods that allow the investor to tangibly possess the precious metal, while other means deal with the trading of futures and options.

Gold and silver may be bought and sold as futures contracts, ETFs, coins, bullion, jewelry, mutual funds and companies. Each investment option has its own advantages and disadvantages. One of the greatest advantages of investing in precious metals, particularly in gold, is that gold is seen as a hedge protection. Gold has been used to save wealth from deflating currencies for thousands of years. When the economy is in a shaky situation and inflation is on the rise, gold helps protect wealth.

When the dollar inflates, gold appreciates making it a hot investment commodity. When large investors buy gold and silver they sell U.S. dollars to make the trade. The impact drives the value of the dollar down and the worth of gold goes up. When the U.S. dollar goes down, demand for gold increases and so does its value. Gold and silver hold many advantages and they help diversify a portfolio. Whether you prefer to invest in stocks, bonds, mutual funds or exchange currency through Forex every investor should add gold and silver to his or her portfolio.

There is no question that of the two, gold is more popular than silver but silver is an extremely valuable investment tool in its own right. Due to silver’s long standing history in many fields, such as industrial, construction, jewelry, technology and photography silver remains in high demand and is a strong investing tool. Like gold, silver may be bought and sold in physical form, such as bullions, coins or bars. It may also be sold in other forms such as mutual funds, futures and options. Though there are advantages to possessing physical silver others find that it may make trade more difficult therefore they prefer to buy and sell silver in the form of futures and options.

Whether buying or selling gold or silver every investor must determine the method that best fits with his or her financial plan. Gold and silver futures are often reserved for experienced investors but new investors should look into this option. There is a great deal of risk involved and it’s important to do your homework so that you understand the risks that are applicable. When you purchase gold futures you are essentially waging on the price of gold at a future date. You will purchase gold and pay the price for the gold at a future date. If the price of gold goes up you’ll make a profit; should it go down you’ll lose money. Futures are traded on the COMEX; a division of the New York Mercantile Exchange. Understand, however, that there is the potential to lose more money than you invested when you invest gold or silver futures contracts. When the price goes up, however, the results can be very profitable. Gold is most actively traded during the months of June and December, while silver sees the most trade during July, September and December.

Another way to invest or buy and sell gold and silver is to buy mining stocks. Many find that buying stocks allows greater control and flexibility as the price of stocks will continue to fluctuate much more than buying bullion or bars. Buying gold and silver mining stocks also provides leverage and it is common to see that gold and silver stocks will fare well than the price of gold and silver alone.

Gold and silver are not only viewed as safe havens against unstable economies but are also used as diversifying tools. Gold has stood the test of time and stands on its own. With a variety of ways to buy and sell gold and silver there is no doubt that every investor’s portfolio should include some form of these highly valuable precious metals.