3 Common Precious Metal Trading Methods

Precious metals like gold, silver, and palladium have fascinated and captivated humans for centuries. Over the years, their status, rarity, durability, appearance, and usefulness have turned them into highly coveted products. And have various purposes, from medicine and high technology to making jewelry.

Investing in precious metals is an excellent way to diversify your investor’s portfolio. Additionally, they maintain their intrinsic value over time and act as a hedge against inflation. The prices of precious metals remain the same throughout the world, and though they are commonly expressed in U.S. dollars, you can also see them in currencies like Euros and Pound.

Their appearing price in the market is called spot price, and its most common unit of measurement is the troy ounce, which is a historical unit of 31.1 grams of precious metals. Using a grams to troy ounce calculator, you can easily convert any amount of precious metal to troy ounces. Continue reading this article to learn about a few popular trading methods for precious metal investments.

Precious Metals Trading
Precious Metals Trading

1.    Mutual Funds

Mutual funds are a popular way to invest in precious metals. They pool investors’ money to invest in a diverse portfolio of precious metals assets, such as physical metals, mining stocks, and shares in royalty companies. Investing in these funds diversifies your portfolio with various precious metal assets, eliminating the risk of investing in a single metal or company.

In mutual funds, professional fund managers and experts manage your funds and make smart investment decisions. These managers research and analyze market conditions to make investment choices that optimize investment returns.

Mutual funds investment is accessible to multiple investors, so you don’t need significant capital to start. The low investment amount makes it popular for traders lacking experience or those with resources unable to purchase physical metals or engage in trading.

2.    Exchange-traded Funds (ETFs)

Exchange-traded funds are a convenient and easy way to track domestic prices of precious metals and trade them without physical possession. To trade in precious metal ETFs, you must buy and sell the metal electronically, just like stocks. When you redeem the ETF, you won’t get the physical metal but the cash equivalent.

ETFs help you track precious metal prices, identify entry and exit points for short-term trades, and confirm trends and reversals. They also allow you to save money as security transactions, sales, and value-added taxes aren’t involved, and you won’t have to pay for any deposit locker charges. ETFs are a safe and secure form of trading as you won’t have precious metals in your physical possession.

3.    Purchasing Physical Metals

Purchasing precious metals in physical forms like coins, bullion, or bars is the most straightforward way of trading metals. Owning the physical assets allows you to be free of counterparty risk as you don’t have to rely on a broker or financial institution to hold your investment. Additionally, you can keep your transactions private, allowing you to maintain anonymity. The metal’s possession also does not incur ongoing fees like management or interest charges, saving you money.

However, securely storing physical metals is challenging since you have to invest in expensive secure safes, bank vaults, or storage facilities. Transportation of physical assets also incurs additional expenses, and trading in physical precious metal assets is a less convenient and slower form of trading than stocks or EFTs.


Precious metals can be an excellent way to diversify your investments. They retain their intrinsic value over time, which also safeguards against inflation. Some standard methods of trading metals include buying physical assets like coins or bars, investing in mutual funds, or dealing in EFTs. However, trading in metals comes with its own set of pros and cons, making it essential for you to carefully weigh the advantages over the disadvantages before making investment decisions. Everyone is different, so make sure you do your own research and seek professional help before making any decisions.

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