subject: Buying And Selling Valuable Metal - Could It Be More Profitable Than Fx Trading? [print this page] Probably you have heard about online trading these two precious metals - gold and silver. The role played by these two precious metals especially gold in the financial market cannot be understated. In addition, they have many uses in various industries. One outstanding feature of these metals is that they are characterised by substantial speculative price gyrations in the financial market.
People are using both gold and silver to trade online for potential gain because of their role in price speculations. Just like the online currency trading, this is done without owning the physical gold or silver. The main advantage is that many people can participate in the trading system. Most investors understand that both gold and silver offers sound level of protection against fluctuation in the currency during hard economic times such as depression.
Merits of trading precious metals
1. Depreciation Protection
These two precious metals offer significant level of protection against depreciation. For instance, gold is a strong storage of purchase power. This is what helps it provide protection against depreciation. Currently there is no direct link between gold and major world currency as it was the case long ago. These two precious metals are also highly liquid because they are widely traded across the world. In particular, gold do perform well during the time when the central bank has used certain monetary policies to weaken its currency. In such cases, the amount of currency in circulation can significantly increase but the amount of gold will not be affected.
2. Absence Of Liability
Precious metals such as gold and silver are not in any way a liability to an individual, bank, business entity or government. Companies can become bankrupt while the government can default on its debts. On the contrary, these two precious metals are not affected the same way. Your portfolio will remain its worth if you invest in gold or silver. It is possible for any other types of asset to loss its value to zero but this cannot happen with these precious metals.
3. International Liquidity
The precious metal such as gold and silver offers the best liquidity value internationally. It will be easy for you to sell gold or silver to any part of the world because of its high liquidity. This is because there will be someone willing to buy your precious metal irrespective of your location. Most people are willing to buy precious metal because they dont depreciate in value.
Disadvantage Of Trading Precious Metals
1. Low Profitability
As compared to currency trading, both gold and silver has low rate of return. This can be explained by the fact that they experience slight price change over time. To make high profits, you must trade these metals for a longer duration.
2. Appreciation Cycles
The only time when both gold and silver appreciate to highest value is during the time when the paper currency has depreciated in value.
3. Price Corrections
Both gold and silver experience substantial price correction just like any other commodity in the financial market. The disadvantage is that if you dont hold these precious metals for long, the price correction can work against you.
Conclusion
Gold and silver are the two precious metals that play very important roles in the financial market. Currently, they are being traded only without necessarily owning the physical metal. These precious metals have proved to be very profitable when traded online for the past few decades. Trading gold or silver online is similar to Forex trading. Mostly this trading is offered by Forex brokers. Other than the widely known currency, you can choose gold or silver trading and similarly makes loads of profits.
