A guide to Metal FuturesMetal Futures are popular securities amongst speculators. Whilst gold futures are by far the most popular amongst metal traders ,and therefore have the most liquidity, there are metal contracts on many others too. Amongst these are silver, copper, uranium and palladium.Futures can be used as a longer term precious metal investment, but there are the financing costs to consider.
Most metals have increased considerably in price over the last six years. Gold prices in early 2000 were just $290 per ounce.
Futures give metal traders an alternative to physically buying and storing the metal. There are many retailers online who sell metal bars and coins for those seeking an investment. Goldcentral.com is one I have used personally in the past. The pricing of these futures factors in the amount of money you could earn if you had the funds in cash. For example at the time of writing the gold spot price is currently $800. The December 2008 future is currently priced at $830. Many of the metal prices are fairly closely correlated. Historically they have been a safe haven during times of crisis. This has indeed been true recently. During the sub prime crisis there has been some extreme volatility in the many of the financial markets. Many of the metals appreciated considerably during this time.
Metal future trading can be done short, medium or long term and due to the volatility of metal trading, they can be extremely profitable.
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Today gold is trading around the $800 mark. One of the reasons for this is the fact that metals are priced in US Dollars. The US Dollar has declined massively against most of the major currencies during this period.