Sunday, November 13, 2011

Trading Precious Metals: 4 Compelling Reasons Why You Should Invest in Them

By Owen Moore


Investing in precious metals is a good business venture. Gold and silver are among the most easily available precious metals that you can trade in the open markets by taking advantage of the frequent fluctuations of their prices. Similar to foreign currencies, gold and silver are traded by the OTC (over the counter) method and their trading is also non-delivery, which does not involve the "physical" purchase or sale of the "commodity". Here are four compelling reasons why you should consider investing in them.

Investing in precious metals provides a significant degree of protection against inflation.

In these tough economic conditions, trading in gold and silver provides an ideal option for safe haven investment. In the past decades, the prices of gold and silver have gone sky-high and they are likely not to come down in the near future. As the rate of inflation increases, so does the value of gold and silver. Thus, investing in gold and silver will provide you with a significant degree of protection against inflation.

Investing in precious metals is a good way of practicing diversification for your portfolio.

Through distributing some funds into another asset category, such as gold and silver, you can greatly minimize your risks and maximize the returns of your investment. Trading in precious metals is generally considered as low risk. Thus, you can incorporate them to increase the trading stability and reduce the trading volatility for your investment portfolio. And, importantly, this will protect you in hard times when some of your investments are not realizing good profits.

Investing in gold and silver has no legal responsibility

Gold and silver are in no way legally responsible for any individual, bank, business entity, company, or government, since none of them can influence their value in the market. A company can become bankrupt, since the government can default on its debts; nonetheless, precious metals cannot be affected similarly. It is important to remember that an investment portfolio dedicated to gold and silver will not lose its value; all the other assets can considerably depreciate in value, even to zero, but this is not able to happen to the precious metals.

Silver and gold investments are extremely liquid and marketable.

Several investors participate in gold and silver trading each day. Thus, as the number of investors participating in the market increase, the prices continue to escalate. This is due to decreased supply and increased demand of the commodities. As such, trading in gold and silver is a good way of increasing the liquidity and marketability of your investments. Therefore, in addition to their low risk, this make investing in gold and silver to be a potential option for trading foreign currencies..

Investing in precious metals, especially gold and silver, is gaining significance in the financial market and many investors are discovering this. Currently, online forex brokerage firms offer them for trading without necessarily having to own the physical metals, and this makes trading in them to be convenient and easy. Therefore, you can take advantage of the aforementioned benefits to earn a decent income from trading gold and silver.




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