What are Spot Metals?

Metals are commodities that can be traded on the global metal exchanges and are popular trading instruments. There are two main categories of metals that investors can take a position on, known as ‘precious’ or ‘base’ metals. Common precious metals that are traded include: gold, silver, palladium and platinum, while copper, nickel, lead and zinc are the main base metals. These commodities can be traded in several of the world’s financial centres, including on the London Metal Exchange (LME), the New York Mercantile Exchange (NYMEX) and the Shanghai Gold Exchange.

When traders invest in spot metals, it principally involves the exchanging of a spot metal for a currency. Undoubtedly, the most commonly traded and popular commodity is gold, which, like several other metals on the market, offers high liquidity. Trading CFDs on hard metals such as gold, silver, platinum and palladium has become a popular form of derivative trading. It allows investors to speculate on price movement within the commodities market.

Reasons to Trade Spot Metals

There are a number of reasons why traders are drawn towards trading spot metals, with savvy investors being aware that it is a great commodity to add to their portfolio. They provide low or negative correlation to other asset classes, meaning that traders can reduce volatility and risk. The spot metals market can be an attractive avenue for traders to go down, due to the following:

• It is considered a safe haven investment
• A good way to diversify your portfolio
• A market with high international liquidity

Trading spot metals is deemed to be a safe haven investment, especially in times of political instability and economic uncertainty. Safe haven investments are assets that are known to either hold their value or increase in value during periods of stock market turbulence or economic unrest.

It is also viewed as being an important way to diversify a trader’s portfolio, due to its status as a safe haven commodity and the fact that it opens up opportunities for a trader to transfer from asset to another.

When compared with the various other markets that are available to traders, spot metals comprise one of the most liquid markets in the world, alongside foreign exchange (forex). Liquidity refers to how quickly and easily an asset can be converted into ready cash, without its market price being affected or impacted on.

Trading metals with IronFX

ronFX is pleased to offer clients the opportunity to trade the four main precious metals of gold, silver, platinum and palladium. Learn more about each commodity before you trade, with a handy guide providing an informative summary below.

Gold- is the most popular of all the precious metals and is a widely traded asset. Over the course of history, it has been used both as money and a store of value. In modern times, gold is used in jewellery and for ornate decoration, while it can also be found in smartphones and computers.

Silver- Another popular metal among traders is silver, which is commonly found within the sphere of industry, particularly in electronics. However, due to its conductivity, silver is utilised in many forms – from batteries and photography to dentistry and water purification.

Platinum- Platinum is popular as an alloy and when paired with cobalt it is used to make magnets. In its purest form and similarly to silver, platinum is used in jewellery and dentistry. The precious metal also serves an important purpose in terms of healthcare, as it is used in a number of chemotherapy drugs for the treatment of conditions and some cancers.

Palladium- Palladium shares a common structure and character to platinum, making it a congener of the closely-related precious metal. It is a rare and lustrous metal with a silvery-white complexion and is used in catalytic converters, medicine, dentistry and jewellery, among others.

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