A Simple Guide to Metals Trading
High school science class may have been the last place where you studied the period table classifying the earth’s known chemical elements. But if you get to know them once again then you could make some big gains on the metal trading market.
Rare-earth metals as well as base and precious metals all provide investors and traders today with a great many opportunities. If you get to grips with the elements then you too can join them and make a killing today. Whilst metals can form part of a well diversified portfolio (it can be considered a different asset class), it also has a variety of risk depending on the metal.
Here is our guide to what it is you need to know and look out for to get you started.
If a metal oxidises or corrodes easily then it is known as a base metal. These include copper, nickel, aluminium, zinc, lead, tin and iron. They are generally found in abundance and have all sorts of commercial and industrial uses, from copper plumbing and aluminium drinks cans to steel car frames. They are far cheaper than precious and rare metals, and their prices respond to changes in demand for the products for which they are used.
All kinds of firms like Sucden Financial can help you start out by finding investment opportunities in base metals, from futures and options contracts of individual metals to base metal exchange-traded funds.
Softer and more ductile, with a high lustre and melting point, precious metals are a step above. They include silver, gold, platinum and palladium, and are scarcer than base metals and hence significantly more valuable. You’ll find them in jewellery, art, coins, dental work, electronics, and are used for investment or holding purposes. You can get into the precious metal market by investing in gold, long regarded as a solid investment especially during insecure economic times.
Investors can also trade stocks, futures, options, mutual funds and exchange-traded funds that are based on holdings in various precious metals.
More and more important these days in the electronics industry, rare-earth metals include elements such as lanthanum, cerium, praseodymium and neodymium. They are used in cell phones, computer chips, cameras and e-readers. They are also important in military applications like night vision goggles or precision-guided weapons.
So while the likes of gold have long been revered, these rare-earth metals are well worth exploring as they rapidly attract attention through a range of trading vehicles that you can find out more about.