If you are planning to expand your trading journey or diversify your investment portfolio, metal trading must be on top of your list. Trading metals is a way to profit from the volatile prices of these industrial commodities. It is a volatile market, but it can also be very lucrative. If you follow the rules and use good judgment, you can make money trading metals.
The first thing to know when you trade metal is that the market is very volatile. The price of a metal can change dramatically from day to day and even hour to hour — sometimes in response to news from around the world. Trading in metals can be profitable, but there are risks involved. If you don’t know what you’re doing and the prices dip, it could cost you a lot of money. So you must trade metals in a safe platform under expert guidance.
What to Know
There is more than 25 lakh actively trading businesses in Australia. Once you have decided to trade metal, you must be able to choose the best tradeable metal from the list. Metals are tangible assets that can be held as a store of value and used to produce products and infrastructure. The most common metals are:
- Copper: It is used in various applications, including wiring and plumbing.
- Gold and silver, both of which are used for jewellery and electronics manufacturing.
- Aluminium is lightweight and sturdy enough for use in the production of aeroplanes and cars.
They are physical. Many of the metals the world uses today were mined thousands of years ago because they’re so tough at resisting rust or decay from exposure to elements like air or water.
With this durability comes the unique ability for metals to retain their value through time—you’ll find coins made from copper over 2,000 years old!
Basics of Metal Trading
As a trader, you can own metals such as gold and silver or invest in the price movements of non-physical assets such as futures and ETFs.
If you’re new to trading metals, you must understand that gold and silver are physical metals. It means they can be stored in your home or placed in a safe deposit box at your bank—they have actual weight and value. On the other hand, futures and ETFs are not physical assets. You can buy or sell these financial products anytime throughout the day without worrying about storing them physically, making them easy for traders who don’t have time or space to store large amounts of gold or silver at home. The price of gold and silver can fluctuate at any given time, but the value of financial products like futures and ETFs are based on how much they’re worth about the underlying asset.
How Does It Work
Supply, demand and global growth prospects impact the prices of metals. Demand for oil increases when there is economic activity, and so do prices. The demand for other commodities, such as copper and gold, also increases with economic activity. With an increase in demand comes an increase in production costs, which impacts the cost of these metals at the market level. In addition to this direct correlation between metal prices and economic growth, several other factors can affect both short-term and long-term trends.
Supply and demand can both impact the price of the metal, as well as its availability. If there is an increase in demand for a commodity but not enough supply to meet it, this will drive the price up. Similarly, if there is a sudden drop in supply due to some factor like a natural disaster or political instability, prices will rise as well. Global economic growth also plays a role in determining whether prices go up or down.