Trading in gold and silver is speculative in nature which means it involves a higher probability of risk but a substantial profit opportunity as well at the same time. Gold and Silver trading becomes viable when there is an economy crisis or downfall in share market. Though trading in commodities is relatively easy but it is kind of riskier trading and you may lose all your hard-earned money if do not trade with strategy and planning.
Majority of people think that investing in commodities, like Gold and silver, is a form of gambling due to its speculative nature. But speculation should not be considered a pure form of gambling as speculation too need a proper strategy to execute a plan and making a decision. Therefore bullion trading can be categorized as hedge trading with speculative nature which is adopted as an alternative to stock trading as a strategy of hedging against inflation and economy crisis.
Commodity trading is based on futures trading so there is no need of exchange and delivery of physical commodities. It also gives you an extra option of margin payment in which you pay only a fraction of whole payment of the contract. Hence trading in commodities like Gold and silver becomes viable to improve your portfolio. This is why more and more retail investors are now turning gold and silver as an investment option.
Though trading in gold and silver provides an opportunity to earn a lot from this market but lack of knowledge and volatility of price movement may result in a loss of wealth at the same time. These precious metals are traded with high volumes as big investors plays the real big role here and as a results, the swings becomes more volatile and unpredictable. So small and retail investors should be careful while investing in precious metals. Remember the lesser you are good at knowledge and experience, the more are the chances of loss. Trading in a commodity market is influenced by supply and demand cycle and inventory. This is also one of the major obstacle to track the direction of the market as availability of this demand and supply information is not as robust as equity market. Therefore keeping an eye on these factors to predict the future price becomes necessary to avoid unnecessary losses.
How to Keep Yourself Updated-
Keep an eye on the global commodity market. Stay connected with news websites providing latest updates and data for the commodity market. Many research advisory firms are there which provides daily research reports for the data of demand and supply along with the market prediction. They also generate commodity trading tips after conducting detailed study and research on these commodities. And these tips are provided to their clients through various mediums like SMS or email.
Although trading in gold and silver commodities throws up an opportunity to earn significant profit but this involves substantial risk also. Experts with adequate knowledge suits this market the best. So make yourself fully prepared before entering into this risky trading segment.