The commodity market is an essential part of the financial market where many types of products are traded. Some of the products that are traded in the commodity market are precious metals, Industrial Metals, energies, crude oil and agricultural produce. The commodity market is important to trading because they help in the discovery of prices. Another important factor is that the commodity exchanges help people to hedge the price risk. They also provide the required flexibility and liquidity to the system.
There are many benefits of investing in the Commodity market.
- Commodity trading is done less than the equity market and thus, the investor gets greater control to generate more profits.
- Precious metal commodities are global commodities and hence, manipulations are fewer when compared to other forms of trading.
- As commodity market’s returns are not directly associated with the equity market in terms of price fluctuations, there is a better
The primary precious metal traded in the commodity market is Gold. Gold is used for many purposes – Jewellery, electronics, etc. Sometimes when the economy is poor, it even acts as an alternative currency. Other than Gold, the other precious metal that is popular in the market is silver. It is a white metal and is used for making weapons, machinery, and utensils. It resembles Gold in the way it is used but less in the industries as compared to gold. As it is cheaper than Gold and is a good alternative to Gold, traders are starting to trade silver more.
Silver as Commodity
Though Silver is cheaper than Gold, it has an important role in affecting the currencies of different countries and thus, have been priced high. There are many factors that influence the Silver prices in the commodity market. People who want to trade silver should know about these factors before they begin trading.
- Silver prices fluctuate based on its availability in the market. Thus, the prices are affected by the production.
- With the rise in inflation, the demand for Gold and Silver increases as people will invest more in the precious metals. Thus, the price of silver increases at that time.
- Silver’s price is tightly tied to that of Gold prices. When Gold prices increases, so do that of Silver.
- As Silver is used in industries, demand for silver in industries drives the price of Silver up.
Trading Silver Online
As we discussed, silver is a widely-used metal and traders have started preferring online silver trading in commodity trading. There are many options available for those planning to trade silver online. They are
- Deciding to buy the stocks of a company that trades in silver. There are so many companies that rely on the prices of silver to make a profit. It is essential to do some research on the companies before planning to invest.
- One can decide to invest in mutual funds. As mutual funds are collections of stocks or bonds, they would naturally have a portion of the investment invested in silver mining companies, or companies that trade i.e., buy and sell silver.
- Decide on purchasing exchange-traded funds. These funds trade just like the common stocks on the stock exchange. As ETFs are a basket of different types of stocks, buying ETFs associated with companies trading silver would be a good option.
- Online Silver trading can also be done in buying a futures A futures contract is an agreement made between two parties that they will buy/sell commodities on a planned/set date in future for some amount of time. For those interested in investing in Futures, which is a traditional method of trading, this is the best option to trade silver online.
- There is one more method that is gaining popularity in recent years – the binary options trading. For buying stocks and other traditional methods, a lot of capital is required. One can make a little investment and there is no need for a deep knowledge curve. With the help of a trustworthy online broker, binary options trading in Silver is possible to even the middle-class people.
Some Points to Remember
When people decide to invest in commodity trading, there are certain basic things required. The one that is of utmost importance is staying updated with the latest news from the commodity market from across the world. Communication regarding market updates, prices of commodities, and trades executed need to be made with the broker on a periodic basis.