Precious metals are metals with high economic value due to various factors such as their rarity,
their usability in industrial processes and their role as a store of value throughout history. The
most popular precious metals among investors are gold, platinum, silver and palladium.
China is the world’s biggest gold producer. Precious metals produced in India and Singapore as
well as China make Asia the heart of the precious metal market. On the other hand, the precious
metal market is dominated by American and European companies and the most important of
these companies are Canadian and German based.
There are a number of ways for investors looking to add precious metals to their portfolio.
Investors who want to physically own precious metals can buy coins or bullions printed from
precious metals and keep them in a safe.
Spot contracts involve the physical purchase or sale of these goods for on-site payment and
Other popular methods include purchasing futures contracts for a specific metal or buying
shares from public companies engaged in the exploration or production of precious metals.
Mutual funds and exchange-traded funds (ETFs) and bullion-backed funds offer a variety of
strategies, including portfolios of mining companies and leveraged risk.
Contracts based on precious metals include spot prices, futures and options. The purchase and
sale of futures occur without actual physical ownership of the traded commodities.
Futures traded on the futures exchange guarantee the underlying commodity sellers the price
they will receive in the market for their products. At the same time, the futures exchange
provides a guarantee (certainty) of the price they will pay at a certain time in the future to
consumers or buyers who form the basis of the commodities.