Precious Metals - Commodities

The main traded precious metals are:

• Gold
• Silver
• Palladium
• Platinum

Precious metals are traded in many ways. Exposure to changes in metals prices can happen directly and indirectly affecting other types of investments. You can trade precious metals through:

• Bullion and precious metal merchants
• Futures contracts
• Option contracts
• ETFs (Exchange Traded Funds)
• Mining stocks
• Collectables

There are market participants from the industrial and manufacturing sectors who use precious metals in new technologies, as well as medical and dental applications. Such companies may need to actively hedge against the rise in cost of precious metals.
Silver and gold have been used historically as coinage, as industrialised economies developed gold was used as a standard for national and international trade. Even today gold is sometimes referenced as a general economic indicator, though its relevance is severely limited. The failure of the gold standard in the 1930s caused governments to move away from precious metals as viable vehicles to stabilise currency value and exchange. Nevertheless the continuing liquidity of precious metals makes them an important investment tool for private and institutional trading and a useful reference for changes in market direction.

Reasons precious metals are popular investments

Precious metals have always held the imagination, but their value as an investment is not based purely on their decorative, aesthetic appeal or as bullion in bank vaults. Precious metals are highly resistant to corrosion, malleable and good conductors, making them useful in industrial processes especially in computers and new technology. Much of the demand for precious metals is from industry. This in conjunction with their relative scarcity makes them an important part of any portfolio as a hedge against inflation.

Gold Spot GBP 1 Year Chart

The gold spot price represents the current settlement price of gold at a given weight in a specific currency, in this case 1 troy oz in £. The spot price should not be confused with the futures or option price.

Silver Spot GBP

Silver spot in £. Silver like gold has many industrial and decorative applications. 50% of the silver produced each year goes into the industrial sector, 25% goes to making jewelry.

Palladium Spot GBP

Palladium has two main industrial applications: it is a key component in the production of fuel cells and the manufacture of catalytic converters. it also has medical and dental applications. It is also used to make jewelry.

Gold Future Contract

The future contract for gold is a popular choice for investors wishing to have exposure to gold but who don't wish to deal directly with the metal itself. The CME has now produced cut down versions of the gold contract with its Gold E-mini, a more affordable entry place for private investors.

Platinum Future Contract

Platinum, sometimes referred to as white gold, is an extremely rare metal, which like palladium is used in catalytic converters but is more popularly known as a metal used in jewelry. Platinum is used in computer hard disks, in fact this highly conductive metal is used in many electronic devices. it is a catalyst in the manufacture of high octane gasoline, and in the creation of petrochemical synthetics like polyester.

Silver Futures Contract

This metal is used extensively as jewelry and has industrial applications.

Palladium Futures Contract

Palladium futures are traded on Nymex which is now part of the CME.

CME COMEX / NYMEX Quotes

• Gold COMEX
• Silver COMEX
• Palladium NYMEX
• Platinum NYMEX