Gold and Silver Futures Trading
These both metals commodities also can be very helpful for diversifying risk in a multi asset portfolio, secure and liquid our assets and a valuable hedge against crisis situations.
The precious metals futures or gold and silver futures contract can be said as the legal contract to sell or buy a specific weight of silver or gold at a specified time and decided price in the future. The contracts are characterized by a futures exchange as to quantity, quality, place and time of delivery.
The gold and silver futures contract can be used by the hedgers as the way to control the price risk on an expected sale or buy of the metal commodities. The hedgers will manage the risk associated with adverse price movements during trading in market place.
As examples of hedgers can be said as manufacturers, mines, jewelers and bank vaults. Hedgers provide an opportunity to take part in the markets without any physical backing as for the speculators. Speculators examples include individual investors, trading advisor and hedge funds.
In commodities or gold and silver futures trading, there are two different positions can be choose by investor. They are short or sell position and long or buy position. Short position is an obligation to accept delivery of physical metal and long position refers to the obligation to make delivery.
Futures contracts on gold and silver futures trading are mostly offset prior to the delivery date. This situation is happened when the investor taking a long position looks for a short position in the same contract, as a result the original long position may be eliminated.
Below are some major benefits of the contracts for the precious metals commodities or gold and silver futures trading.
+ It is easy to go long or short position with high flexibility to protect our money.
+ No counter party risks as the futures contracts are insured by clearing firms.
+ Cover from the possibility of price uncertainties.
+ Offering more flexibility, financial leverage and financial integrity compared to trading the commodities themselves.
Metal Commodities trading such as gold and silver futures are traded in dollar per ounce. Standard futures are traded in both eCBOT and COMEX. As other information, there are also mini silver futures contract in eCBOT.