around the world embraced gold and silver as a
store of wealth and
a medium of international
exchange. Individuals have sought to possess
precious metals as insurance against the
day-to-day uncertainties of paper money.
platinum and palladium
constitute the majority of
trading in precious metals.
Trading in precious metal
futures market or spot market in a speculative
manner provides an
to traditional means of
investing in precious metals such as gold
bullion, coins, and mining stocks, and where
substantial profits, as well as losses can be
made. Trading contracts in precious metals also
valuable trading tools
for commercial producers
and the users of these metals.
Precious metals are traded on the
futures and spot markets in contracts (a
contract of gold is 100oz while a contract of
silver is 5000oz). On the spot market, precious
metals are usually bought or sold based on a
value date of 48 hours which can be rolled over
on a daily basis thereafter. Trading on the
futures market is done by buying or selling
precious metal for a specific settlement date in
the future, for example July Gold, i.e. buying a
gold contract say in March for July settlement.