Commodities

Top 4 Best Tips On How To Trade Gold Professionally

Gold Trade

Gold is undoubtedly one of the most appreciated metals amongst professional traders, at the moment – and that is perfectly understandable, given the fact that the gold prices have been on the rise lately. Most traders regard gold a very save haven asset, almost as safe as platinum, and if you are just getting started in the trading industry, then here are several professional and useful tips on how to trade gold efficiently, in order to minimize your losses and to maximize your gains:

1. Never Invest More Money In Gold Than You Can Afford To Lose

A very common mistake amongst beginners in the trading industry is that they often end up buying too much gold – in spite of being one of the safest and most stable metals at the time being, there are many other valuables from the same asset class that have fallen in value. Statistically speaking, most professional investors invest less than 5% of their portfolio in gold, while beginners are advised to invest no more than 3%.

2. Gold Miners Are An Outstanding Way To Gain Exposure

If you are committed to gaining exposure to gold, then look no further than gold miners. The share prices of mining companies have increased lately, thus making them hold better value. Nonetheless, it is important for every gold investor to remember that shares in gold mining companies will be affected by all broad sell-offs in equities, which means that this metal can be very volatile and easily influenced by the market conditions.

3. Exchange Traded Funds Are A Good Choice

As it happens with platinum and silver, investors who have decided to trade metals should know that gold ETFs (exchange traded funds) are a great way to gain further exposure to gold. Those who are interested in doing so should know that they can easily buy and sell shares on a daily basis, and all funds are always backed by physical gold, which means traders can rest assured knowing that their money is in good hands. However, it is important to remember that some yearly management fees may apply to these gold exchange traded funds. Also, if you just want to “test the gold market”, then you should only use gold exchange traded funds in the short-term: the longer the period, the higher the risks.

4. Never Underestimate The Value Of Holding Physical Gold Separately

Last, but not least, no professional gold trader will focus exclusively on physical gold – as mentioned above, the metal trading market is a highly volatile one, and abrupt changes in the gold prices can occur when you least expect them. This is why it is of utmost importance to hold some physical gold in vaults or in nominee accounts, as this is the only way to be sure that the metal is held in your name. There are numerous trustworthy, experienced and reliable gold storing services that offer such services, at affordable yearly storage costs. In spite of the fact that holding physical gold does offer the owner some peace of mind, the only downside is that finding a physical buyer can be a time-consuming process.

Best Commodities to Trade in 2015

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What affects oil prices?

Oil Prices

What affects oil prices? This can be a possible question in case you are interested in investing in the sector. There are many factors that affect the price of oil. They range from oil production to the way it is handled in the market. Oil is a mineral that is available naturally. In some areas there is plenty of oil while in other places it is very rare. There are many countries in the world that have a lot of oil resources which has made their economies grow. The mineral has many uses such as in powering industries and in the automotive sector. There are also other petroleum products that can be used for different purposes hence the commodity has many uses. Here are factors affect oil prices:

  1. Global changes in supply and demand

The oil production in the world is controlled by OPEC. The organization tries to maintain stable price for a barrel of oil but due to different challenges the price of oil barrel has been fluctuating. Because oil is produced in specific regions of the world, it depends on different means of transportation to reach different parts of the world. The constraints in transporting the oil to different parts of the world lead to differences in demand hence making the price of oil to fluctuate.

  1. War and political instabilities

Due to political instabilities in countries located in the Middle East, there has been an increase in the price of oil. This is due to the fact that when the countries that produce oil go into war with each other, they stop the oil production activity. A good example where political instability lead to an increase in the price of oil is when the countries that produce oil in the Middle East were in war with the USA. The most hit countries by the increase in the price of oil due to the war was those that used to import their oil directly from Middle East countries. War leads to lowering oil production hence leading to an increase in the world prices. The rise in the price of oil due to political instabilities in the producing countries affect many economies of the world especially those that rely on power from the oil to run their factories. This is mostly manifested where the cost of production goes up.

  1. Oil available in oil reserves

The price of oil in different countries can be affected by the oil reserves of the countries. For instance, different countries that do not produce oil will import it from oil mining countries and store it in their oil reserves. In case of a decrease in the supply of oil in a given country, the government of the country can decide to tab oil from its reserves. This will lead to the price of oil falling because traders will fear more decrease in the price of oil hence releasing more to the market. Some of the oil reserves that the government can tab to regulate oil prices include oil available in the oil refineries.

Best Commodities to Trade in 2015

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Best Commodities to Trade in 2015

Best commodities to trade

As 2014 comes to a close, we take a look at the financial sector to see how commodities have fared in the market. What this does is that it allows us to predict what the market trends will look like in 2015. As a result one can plan what commodities to trade in within the coming year in order to maximize profits.

A Brief Review of 2014:

  • Gains: The year 2014 has seen quite a few highs and lows in the commodities market. The U.S. Stocks have increased considerably, despite a correction in September and October. Furthermore, the growth in earning and continual monetary support from the Federal Bank has ensured that the stocks thrive. The Standard and Poor’s 500 Index generated a total return of 10.35 percent year to date since November 2014.

With the Barclays Aggregate U.S. Bond Index generating a return of 5.19 percent, bonds have also proved to be a profitable investment.

  • Losses: On the other hand, gold and oil have shown sharp declines. Gold has dropped 1.8 percent while oil is down by a staggering 18.2 percent.

Having seen what the market looks like in 2014, let us look at some of the predictions regarding commodity trade in 2015.

Best Investments for 2015

  1. Metal: The market for metals has shown a steady increase over the last couple of years. As of now, they seem to be a safe bet in terms of investing. The returns have been fairly high and those who wish to invest in commodity instead of stock can take a look at this sector.
    1. The cost of palladium has increased from $853 to $860 per ounce in the Canadian market.
    2. However, it is important to note that gold and silver have suffered an overall decrease. Metal prices are predicted to drop by at least 5.5%. The reduced demand for precious metals from China is a major contributor to the weakness of this financial sector. Hence while considering investments, traders are advised to follow the updated market trends.
  2. Farming and Crop: While 2014 has seen a general downward trend in commodity prices of crops, rice, coffee and cocoa seem to be the exceptions to the rule. This is because of declining crop prospects amongst Asian suppliers. The result is an increase in prices across all three commodities. Cocoa, especially, could see a further price hike due to the problems faced by workers many of whom have become victims to the Ebola virus.
  3. Industrial Sector: While oil prices have fallen steadily over the course of 2014, there is also an increase in the number of new plants being constructed for natural gas supply. What this means is that it is possibly safe to expect that investments in the pipeline companies will return higher profits. No matter what happens with the price of oil, the infrastructural details promise to be unaffected. In fact, many financial experts predict that the government will allow a widespread supply of oil and natural gas in the new year.

While investing in any commodity, one must always consider the market trends in the past year and keep in mind predictions from credible sources. Since financial trends fluctuate based on any factors such as foreign policy and international demand and supply, there is a need to follow the changes on a regular basis in order to make a profitable investment.

More into currencies? – read THIS

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