What You Need To Know About Metal Trading

What You Need To Know About Metal Trading - FXSuit Academy

Some may wonder why metals are so important that they can be traded. Well, metals are chemical elements or compounds or alloys that are hard in the solid state. Apart from this hardness, they are also often shiny and can conduct heat and electricity easily. This is in addition to having other properties like ductility, malleability and fusibility. All these characteristics have made metals to be in high demand across the globe.

As hinted above, it is the physical properties of metals that make us depend so much on them in various activities. From the construction of homes, railways, seaports, bridges to airports and to the manufacture of automobiles, power plants, aircraft and so on, metals are indispensable. Modern civilization as we know it cannot be possible without metals. A vast majority of all the elements on the periodic table are actually metallic in nature. Even though many normally assume that metals are always shiny, the reality is that metals are often dug from beneath the earth’s crust then refined before it has its polished and appealing appearance.

The level of abundance of metals in the earth crust varies and good examples of very common ones are iron and aluminum. On the other hand, some other metals are very rare and these include gold, platinum, and palladium.

Different Types of Metals

For anyone interested in the trading of metals, it is important to know the classification of metals. There are two broad groups of metals and these are base metals and precious metals.

Base metals: These are very common metals used regularly in all kinds of industrial applications. These include iron, manganese, nickel, lead, copper, and zinc. They do not command the same level of economic value like precious metals. Base metals are often cheap and easy to source.

Precious Metals

These are very rare and naturally-occurring metals. Examples are gold, silver, platinum, iridium, rhodium, ruthenium, osmium and palladium. As a result of their scarcity and applications, precious metals have very high economic value. One thing that makes precious metals stand out is that they can serve both as investments or measure of value and also as industrial elements.

Precious metals are used in several industrial applications. These include the manufacture of electronics, jewels, catalytic converters, dental tools and an array of other useful items. But that is for an industrialist. Investors on their own make use of precious metals by collecting them as solid bars or coins which serve as the real source of value and investment.

It is this use of precious metals as investment vehicles that made them the focus of serious speculation in the commodity markets. For traders, precious metals are just like money or currency that has inherent value. As a matter of fact, many traders are of the opinion that precious metals are far more valuable than fiat currencies like dollar notes.

Of all the precious metals, the following are the most traded:

  1. Platinum
  2. Silver
  3. Gold
  4. Palladium

Principal Global Metal Trends

Several perennial trends that can open up a number of investment opportunities in the metal trading sector include:

  1. Increased demand from China
  2. A rise in the global population
  3. Changes in environmental regulations
  4. Innovations and advancements in technology

Top Precious Metal Indices

The following are regarded globally as the main precious metal indices:

S & P GSCI Precious Metals Index

This gives investors very detailed and transparent details on the current benchmark regarding investment opportunities and the performance of the precious metals on the market.

DBIQ Optimum Yield Industrial Excess Return

This index is made up of futures contracts and it focuses on the most valuable base metals. It also gives an overall view of the performance and trends in the industrial metals sector.

S & P GSCI Industrial Metals Select

This is also another platform with highly-valuable details for investors looking into having useful information on the benchmark for stakeholders and also how industrial metals perform in the global commodity market.

Finishing note

Metal Trading can be easier for those with experience but very challenging for beginners, so its important to understand the above mentioned points before beginning the journey here.


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