What are Metals?

How do I trade Gold? What is silver trading?

Those are the 2 main precious metals that should spring to mind when thinking of metals trading. But they aren’t alone. In this article we will look at the various types of metals available to trade, some contract specifications and also some history of the main contracts.

You don’t have to physically own the precious metals you buy and sell. You can trade most metal contracts as CFDs or as spread-bets. Not only that, but you can invest in certain ETFs or metals-mining stocks.

What is Gold?

Gold is the most sought after and well-renowned precious metal and has been used as currency for many years. Yellow in colour, gold is an element that occurs naturally and is mined throughout the world – with the first known gold artefacts seen in Bulgaria. Nowadays, around 25% of newly mined Gold comes from Asia.

The symbol for trading gold is XAUUSD – With the periodic table element symbol being AU – which some of you may or may not remember. Gold has been used as currency for a large number of years – Dating all the way back to early 600 BCE. The total supply of Gold globally is said to around the 170k tonne mark.

Gold is traded around the globe and is widely received as a ‘safe-haven’. This means that during periods of market uncertainty and turbulence, the ‘safe-haven’ asset is expected to maintain its value or even increase despite the market disorder. 

Another few reasons why traders look to trade gold are:

• For speculation. XAU can be an interesting product to trade with its links to inflation and the USD
• As previously mentioned, to hedge against economic instability (safe-haven)
• To hedge against inflation
• Or purely to diversify their current portfolios

How to trade Gold

There are many ways you can gain exposure to the yellow metal.

Here are the main methods of trading:

1. Trade Gold Futures
2. Trade Gold Spot
3. Trade Gold as a CFD
4. Trade Gold as a spread-bet
5. Trade a Gold ETF
6. Trade gold-linked stocks
7. Trade gold-linked commodity currencies

When you trade gold as a CFD or a spread-bet, an ETF, stocks or commodity currencies – you don’t actually own any physical gold. You are just trading on the prices of the underlying gold contracts, whatever they might be. The advantage of doing this is the fact that you wont have to deposit the full amount of margin required, by way of leverage.

Is Gold a good investment?

Lets take a look at the last few years trading history of the precious metal below:

As you can see – from 2015 where the low in December was around the $1050 point, we have seen some significant gains in gold. In August 2020, the price reached an all time high of $2067.15 – almost doubling its 2015 price point.

What is Silver?

Silver is the second precious metal we will look at in this article. Runner up only to gold in our list of most traded, popular metals. The symbol for silver is similar to gold – XAGUSD vs XAUUSD. You may remember your periodic table from school where the chemical element symbol was AG.

Most of the silver produced today is actually produced as a by-product of other metals like gold and copper refining. Like Gold, silver has been used as currency for many years and is also popular in the jewellery world thanks to its shiny, white metallic appearance. Its also known to have the highest electrical conductivity of all the metals.

“Gold and silver have always had value, never gone to zero. Can you say the same for stocks and bonds?” – Mark Skousen

Silver was first known to be used as coin currency back in 600BC. Way back before they switched to the Euro, the Greek Drachma was a silver coin. The XAG code we mentioned earlier actually refers to silver bullion. Only 4 precious metals have these ISO codes. Previously mentioned, Gold is one other. And we will come on to the other two in this article.

Silver is highly correlated to Gold and Gold is considered a safe haven. Does this automatically make Silver a safe-haven too? Yes, is does. Both gold and silver are negatively correlated with the stock market so both are classed as safe-haven products. When there is increased market volatility and traders are looking for a safe-haven, they may sell a lot of their stock market holdings and invest in gold and silver instead. This process is known as a ‘flight to safety’.

And again, much like gold, traders look to silver as a product to trade for many reasons including:

• Diversification
• Speculation
• Inflation hedging
• Flight to Safety

How to trade Silver

There are many ways you can gain exposure to the silver metal.

Here are the main methods of trading:

1. Trade Silver Futures
2. Trade Silver Spot
3. Trade Silver as a CFD
4. Trade Silver as a spread-bet
5. Trade a Silver ETF
6. Trade silver-linked stocks
7. Trade silver-linked commodity currencies

When you trade silver as a CFD or a spread-bet, an ETF, stocks or commodity currencies – you don’t actually own the underlying physical silver. You are only trading on the prices of the underlying silver contracts whatever they may be. The benefit of doing this is you don’t have to deposit the full amount of margin required by way of leverage.

Is Silver a good investment?

Lets take a look at the last few years trading history of the silver precious metal below:

Silver is largely correlated to Gold in many ways. So as you can see from the chart above – the price action is very similar to Gold with the price doubling in the same 5-year period we mentioned above.

XAU and XAG can sometimes be the only 2 precious metals traders look to profit from. If this is the case for you, no problem – click here to start trading the 2 most popular metals today

What is Platinum?

The third precious metal we are going to look at is Platinum. Used in expensive jewellery, specifically wedding and engagement rings, Platinum is considered the premium metal. Platinum is actually said to be 35 times rarer than gold itself, as well as being both stronger and more durable.

Platinum is not only popular in the Jewellery world. It is used far more for magnets, drugs, catalytic convertors and electrical contacts. The drugs are usually cancer/tumour treatments as the metal is non toxic and has been said to inhibit the growth of cancerous cells.

However, most of the platinum used today is in the catalytic convertors of cars. Platinum is a good metal to use in these systems because it can withstand enormous heat pressures and they produce less toxic emissions than other materials.

Platinum has the ISO code XPT and is often seen quoted as XPTUSD against the USD. Investors can buy physical platinum in bars and coins much like silver and gold. Platinum is mined and can mainly be found in South Africa, North American and Russia – Although South Africa takes the lion share.

When you trade platinum as a CFD or a spread-bet, an ETF, stocks or commodity currencies – you don’t actually own the underlying physical platinum. You are only trading on the prices of the underlying platinum contracts whatever they may be. The benefit of doing this is you don’t have to deposit the full amount of margin required by way of leverage.

Platinum Fact – In the 1780s, King Louis XVI of France, declared that Platinum was the only metal fit for a king!

How to trade Platinum

There are many ways you can gain exposure to Platinum:

Here are the main options of trading:

1. Trade Platinum Futures
2. Trade Platinum Spot
3. Trade Platinum as a CFD
4. Trade Platinum as a spread-bet
5. Trade a Platinum ETF
6. Trade Platinum-linked stocks
7. Trade Platinum-linked commodity currencies

Is Platinum a good investment?

Lets take a look at the last few years trading history of the XPTUSD – precious metal below:

As you can see from the chart above, the price of platinum compared to silver and gold has been much less volatile and the % gain over the last 5 years has been a lot lower.

What is Palladium?

Finally, we are going to take a look at Palladium – Not quite as rare a precious metal as platinum but still said to be 30 times rarer than gold. Discovered back in the early 1800s – Palladiums ISO code is XPD, XPDUSD when trading against the USD.

Palladium is mined around the world but mainly in Russia, Canada and South Africa with most palladium mined in Russia. Palladium can also be produced by ‘nuclear fission’ reactors.

The first coins made with palladium were made in Sierra Lione and since then, have been used all over the world with Russia known to be the Country to have minted the most coins.

Palladium is used for many different things including:

• Catalytic convertors (Around 80% of palladium is used here)
• Groundwater treatment
• Medicine
• Dentistry
• Jewellery

When you trade palladium as a CFD or a spread-bet, an ETF, stocks or commodity currencies – you don’t actually own the underlying physical palladium. You are only trading on the prices of the underlying palladium contracts whatever they may be. The benefit of doing this is you don’t have to deposit the full amount of margin required by way of leverage.

How to trade Palladium

There are many ways you can gain exposure to Platinum:

Here are the main options of trading:

1. Trade Palladium Futures
2. Trade Palladium Spot
3. Trade Palladium as a CFD
4. Trade Palladium as a spread-bet
5. Trade a Palladium ETF
6. Trade Palladium linked stocks
7. Trade Palladium-linked commodity currencies

Is Palladium a good investment?

3 reasons why palladium has risen so much in the last few years:

1. Simply – Supply and Demand at a high level
2. The US-China Trade deal boosted prices
3. The Diesel emission scandal – with consumers buying petrol over diesel (Petrol cars use palladium while diesel use platinum on their catalytic convertors)

Top Metals Tips:

• Gold is quoted in ounces – Usually 100
• Silver is also quoted in ounces – Usually 5,000
• The Code for Gold is XAUUSD
• The Code for Silver is XAGUSD
• You can trade metals as futures or spot
• Both Gold and Silver are quoted against the USD

Useful Futures Metals Contract Specifications:

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