Palladium China

Gold may be at its lowest point for 2008 and other metals may be on the way down too but what were the five key influences on their meteoric price rise?

Over the past five years the price of precious metals has more than doubled. The surge has been attributed to a combination of the following:

1)Depreciation of the US dollar. The World Gold Council provides evidence supporting the view of an inverse relationship between the price of gold and the US dollar. Over the past five years, from 28 February 2003 to 29 February 2008, the US Dollar Index fell 26.1% while the price of precious metals soared.

2)Inflation. Rising oil prices increase inflationary pressures. During periods of rising inflation, the price of precious metals trends upward. Studies conducted by the World Gold Council support the view that gold is a long-term hedge against inflation.

3)An increase in global wealth. The rise in global income, particularly from emerging market economies such as China and India, has contributed to increased demand for precious metals for manufacturing and jewellery.

4)Exchange Traded Funds (ETFs). The introduction of ETFs stimulated demand for precious metals. ETFs initially began as a bundle of equities tracking the performance of indices and were traded on a stock exchange in the form of shares. By 2004, ETFs moved into the precious metal sector and by early 2007 nearly 22 million ounces of gold were held in ETF accounts. By 2006, 18% of the world’s investment demand for physical gold came through ETFs.

5)Geopolitical tensions and uncertainty. Global political tensions generally trigger a short-term speculative rise in the value of precious metals. A good example is the 1979 Iranian Revolution. In the run up to the crisis, the price of gold rallied from $226 in December 1978 to $512 in December 1979, a 126.5% rise in one year. During the same period, silver surged 267.6%, from $5.93 to $21.79. The recent uncertainty generated from the credit crunch and the deterioration in the housing market has instilled fear and contributed to a similar surge.

The price of gold is currently on the way back down. However if you are looking at spread betting on gold or any other metal it is interesting to note the recent comment from Anthony Grech, Analyst, IG Index, “despite gold receiving most of the media attention, it has not been the best performing precious metal over the past five years. Platinum and palladium outperformed the precious metals sector over the past year. During this period, platinum and palladium surged 72.6% and 60.9%, respectively while gold rose 45.5%. A five year view, from February 2003 to 29 February 2008, reveals that silver was by far the best performing precious metal, up 330.8%. Platinum placed second with a 215.7% rise, followed by gold’s 178.4% increase”.

Financial spread betting carries a high level of risk and may not be suitable for all classes of investor. Only trade with money that you can afford to lose. Make sure you fully understand the risks involved. If necessary, seek independent financial advice.

About the Author:

The author is an experienced financial trader and respected commentator on the spread betting futures markets.

Article Source: ArticlesBase.com – Precious Metals Spread Betting Trends

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Here we look at the best contracts to trade, for long-term trend followers – and how to blend these commodities and futures contracts, to obtain good diversification – and great profit potential. We also reveal the one commodity contract, which any trader should be looking to trade.

One of the great advantages of commodity futures trading is the wide variety of un-correlated groups that you can trade.

The main trading groups are:

. Currencies

. Interest Rates

. Stock Indices

. Grains

. Meats

. Energies

. Metals

. Food and Fibre

The big moves only come a few times a year – and of course, in futures and commodities, it’s the big moves that make the big profits.

Single Groups or Diversification?

In futures, and commodity trading, this depends on the risk / reward you want – and the amount of capital you have.

If you trade just one or two groups, then your commodity and futures trading risk / reward in will be higher

The Best Contracts to Trade

We have outlined the best futures and commodities contracts below – based upon the following criteria:

. Liquidity, and investor participation

. Long term trends, over the last 30 years.

Currencies

A great market for long-term trend followers – all currencies exhibit long-term trends – as they reflect the underlying health of the economy.

A good place to start is the Dollar Index, which can be less volatile than the individual currencies – and is suited to long term position traders.

Interest Rates

Another great group – interest rates – considered “boringâ€, by many commodity futures traders – but they’re not! They have great long-term trends – with the best contracts being the T Bond and T Notes.

Stock Indices

The S & P is the one, most commodity & futures traders look at – but there are plenty of others. Good markets to trade include the DAX, NASDAQ and Dow Jones.

Energies

Energies are the biggest physical commodity group in the world – in terms of volume. The energies group exhibits good, long-term trends all the time.

All traders should start with Crude Oil, but for traders who really want to taste some action, check out Natural Gas – when trends come here, they’re huge! A word of caution on this market – it’s only for futures commodity traders with deep pockets – and strong nerves.

Adding Diversity

The above commodity futures are all suitable for trading as individual groups – however with the contracts listed below, we’d only trade as part of a diversified portfolio – due to lower liquidity, and limit moves.

Metals

The main focus for speculators is on, Copper, Gold and Silver – however the White Metals of Platinum, and Palladium, have produced some of the best trends of recent years.

These rare metals are precious metals – but double up as industrial metals as well. Although trading volumes are thin, volatility and limit moves are frequent – for traders with deep pockets, these metals offer outstanding long-term trends.

Grains and Meats

Grains and Meats were big contracts for speculators in years gone by – but they have lost some of their shine. Speculators now trade more financials – however, Pork Bellies, Live Hogs, Feeder Cattle, and Live Cattle, still offer commodity futures traders great trends.

The grains are similar and the Soybean complex – Wheat, and Corn, are the markets to look at.

Food and Fibre

The markets to look at are Orange Juice, Coffee, Cocoa and Cotton. Cotton is probably the best market for long-term trend followers – but this is very much a personal choice.

Successfully Blending a Portfolio

Today, many traders simply focus on the financials (and currencies are the best group to trade) – however as you can see from the above, that commodity futures traders, have plenty of contracts from which to choose.

With the global economy expanding fast, there’s one contract that looks a great long-term buy – the contract to buy, and hold, for huge gains. It’s the CRB index – which is a basket of commodities – and it looks set to soar – because, commodities go up, based upon the huge demand from countries, such as India and China – check it out!

About the Author:

1,000 Pages Of Wealth Building Material FREE!
Including tips, strategies and systems and more on commodities futures info. Visit our web site at
http://www.tradercurrencies.com

Article Source: ArticlesBase.com – Commodities Futures – the Best Contracts to Trade