What is Metal Trading?

Precious and base metals are all over the counter (OTC) products, meaning that buying and selling these commodities does not involve physical movement of them. The metal trade works similar to other common investments, with the intention of purchasing a metal at low value and selling for a profit when this has risen.

There are a wide variety of metals available to trade, from the three precious metals of gold, silver and platinum, to base metals that include aluminium, copper, nickel, lead and zinc.

Gold is the most actively traded metal due to its wide range of uses. From use in jewellery and electronics to the large reserves central banks hold, there is a constantly large supply and demand, influenced by market uncertainty, inflation and risk.

Ways to Trade Metals

There are a range of different ways to invest in precious and base metals:

    • Bullion: Those who want the physical gold coins and bars and have space to store them can invest in bullion.

    • Contract for Difference CFDs: A Contract for Difference allows you to speculate on price movements in a number of financial markets, regardless of whether they’re rising or falling.

    • Futures: High liquidity and leverage are available with online metal trading futures, providing large potential profits but also losses.

  • Certificates: Similar to investing in bullion, without the hassle of having to transport and store the metals yourself.
Further contract specifications need to be considered when deciding whether to enter the metal trade. These include the base currency used, contract size, point value and the market opening hours. Otherwise you can begin online metal trading easily.

Why Trade Metals?

The global metals market may not be as large or liquid as forex or the wider commodities, but there are still many advantages of metal trade which make it an appealing option for many traders and investors.

    • Hedge against risk: Precious metals are considered safe haven investments and can be used to hedge against inflation and economic uncertainty. Even though they are still affected by price fluctuations, they can protect against economic changes.

    • Diversify: Diversification is another method for reducing risk and metals play an important part as they can mitigate against more volatile forex markets, for example.

    • International liquidity: Metals are not bound by certain countries the way currencies can be, presenting high levels of international liquidity. This makes it easy to buy and sell metals around the world.

  • Easy, low cost trading: Online metal trading makes the process simple, with charting and analysis tools alongside low transaction costs for making a metal trade.