How to Trade Gold and Silver Futures

Gold futures trade

Trading in precious metals futures, specifically gold, silver and platinum, is like trading other commodities on the futures market. You are basically placing a bet on the direction of the gold and silver market and placing a trade based on what you believe the price will be in the future, usually 3 to 6 months out. It is a risk for an investor because typically they place a small percentage down and will make a substantial gain or lose the entire investment.

Instructions

1. First study what makes gold and silver, and also platinum, move in price. You are most likely buying a futures contract in U.S. dollars. That means if the dollar is stronger gold and silver may drop in price. If the dollar weakens gold and silver spot prices should go up in relation to the dollar. This makes gold and silver futures trading similar to FOREX trading because precious metals can rise against the dollar but fall measured against another currency. Other world economic and industrial use factors also effect price. Gold often rises in the last quarter of the year with strong Christmas jewelry sales.

2. Once you have a handle on what moves the spot price of gold and silver find a brokerage account with a broker who trades commodities. I prefer a low fee broker as if you are well educated, which you should be to risk commodities investing over taking physical possession, then fees eat into profit and you may not be looking to your broker much for guidance.

3. 

   Fund your investment account with a wire transfer and watch for the market conditions you believe will make gold and silver rise or fall on a futures contract. Place your trades and watch the market. You can sell your contract early, but if you guessed wrong the loss will be substantial. At the maturity date for the futures contract you will have a large gain or a total loss. Commodities trades are not for the novice or for the investor who cannot afford a loss. For small investors like myself I recommend taking physical possession of gold and silver rounds or bars.

Tips & Warnings

• A small move in the futures market if you have 10% down will result in a big gain or complete loss of principal in a short time frame. Do not invest what you cannot lose in commodities.