For millennia, precious metals have been considered a medium of exchange, an instrument of reserve, or a store of value. This is especially true for metals such as gold and silver.
Due to their rarity, precious metals are too expensive to be used as modern money. However, investing in precious metals is very popular and used as protection against inflation and economic slowdowns.
Precious metals were used as a means of payment in the past, but today they are seen more as investment vehicles or industrial raw materials.
The term “precious metal” dates back to the late 14th century and can have slightly different meanings in different fields and applications.
How are the prices determined?
Gold or silver prices are important for producers and end users. They have long been used to monitor economic and market conditions.
USD Prices
Since precious metals are traded in USD, a weaker USD can lead to higher prices for precious metals. A strong dollar affects the price of precious metals respectively.
Interest rates and monetary policy
The lower the interest rates of the world’s major central banks, the looser the policies and the price of precious metals is expected to rise due to potential inflation and lower yields on other assets such as bonds.
Economic data
Weak global economic data could increase demand for assets like gold and reduce demand for risky metals such as palladium that depend on economic growth. Strong economic data could dampen demand for gold and support riskier assets.
Political uncertainty
Political uncertainty can affect investors’ motivation, prompting market participants to seek greater risk or certainty. Additionally, political uncertainty in areas where precious metals are mined could disrupt supply chains, reducing supply and raising prices accordingly.
Of course, other factors may affect precious metals prices, but these are the main ones.
In the meantime, start identifying your financial investment goals. What do you need in the future? You may want to buy a house or car, pay for your children’s education, plan a vacation abroad, start or grow a business or new venture, or simply have enough money for retirement.
The next aspect to consider is your risk tolerance, or ability to take risks. This depends on income, savings, spending, financial obligations, and adequate financial security for life and health. And, last but not least, your temper.
Let’s give an example of how to buy and sell precious metals CFDs; we will use gold CFD as an example.
How to buy stocks?
- Log in to your Admirals account (MT4 / MT5 / WebTrader / Mobile App)
- Enter “Market Quote”
- Find Gold
- Right-click on the stock and select “Chart Window.”
- Once the graph appears, click the “New Order” button (in the toolbar below the menu)
- Select the lot size in the Volume field, and the Stop Loss and Take Profit levels (if you want to set such)
- Click the blue “Buy at Market” button
When you buy a gold (long position) CFD, you expect the price of the precious metal to rise, allowing you to profit from the trade.
How to sell stock?
- Log in to your Admirals account (MT4 / MT5 / WebTrader / Mobile App)
- Enter “Market Quote”
- Find Barrick Gold Stock (#ABX)
- Right-click on the stock and select “Chart Window.”
- Once the graph appears, click the “New Order” button (in the toolbar below the menu)
- Select the lot size in the Volume field, and the Stop Loss and Take Profit levels (if you want to set such)
- Click the red “Sell to Market” button
When you sell (short position) a Gold CFD, you expect the precious metal to become cheaper, allowing you to make a profit on the trade.
Once you know what precious metals are, why you should start investing in them, how much they cost you, and how to invest in these assets, it’s time to move on to the more interesting, practical part of investing in precious metals.