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What is a Precious Metals Exchange?

A. Leverkuhn
A. Leverkuhn

A precious metals exchange is a market or exchange that allows investors to trade precious metals like gold, silver, platinum, and palladium. These items are also traded on major national exchanges. Investors should compare and contrast “precious metals exchanges” to other wider exchanges in considering where to place their money.

True precious metals exchange are commodities exchanges. Precious metals are commodities; they are physical assets that can be traded by weight or by other measures. Commodities have generated a lot of different market tools and ways for investors to get involved in gaining from price fluctuations in all kinds of commodities including precious metals. Investors can also trade “commodity products” like futures contracts, exchange traded funds, and single stocks.

Stack of gold bars.
Stack of gold bars.

The trading of precious metals by weight and the trading of single stocks of companies involved in handling precious metals were the most traditional ways to invest in precious metals. In modern markets, investors have added opportunities including futures contracts, where investors wager on the future prices of precious metals, and exchange traded funds or exchange traded notes, where traders pay a single “share price” for a basket of precious metals stocks and equities.

Palladium is traded on a precious metals exchange.
Palladium is traded on a precious metals exchange.

Those who are looking at products on a precious metals exchange can also evaluate what kinds equities are involved for gold, silver and other metals. Some focus on “raw” metals, such as gold or silver in “bullion” form that are only valued by weight. Other funds include equities based on numismatic values for heavy metals, when gold, silver, or some other metal has been made into coins, jewelry or anything else that carries its own value. More speculative gold or silver funds may include exposure to mining operations or even to the synthesis of heavy metals, which seems like a promising field to some traders.

When people talk about a precious metals exchange, they may also be referring to broader commodity markets like the Goldman Sachs Commodity Index, where traders have access to precious metals as commodities. Certain other “precious metals exchanges” have sprung up in the form of independent businesses that will facilitate trades in precious metals. Experts encourage investors to look closely at these kinds of “exchanges” before investing money. Some businesses referring to themselves as precious metals exchanges are simply precious metals dealers able to facilitate trades.

For many investors, it makes sense to turn to broader commodities exchanges to get access to precious metals or precious metals based equities. Many of the most popular precious metals funds are now traded on major national exchanges like the New York Stock Exchange, or NYSE. That makes finding specialized precious metals exchanges unnecessary for many traders. Commodity-specific exchanges, however, can be useful, especially in foreign market trading.

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    • Stack of gold bars.
      Stack of gold bars.
    • Palladium is traded on a precious metals exchange.
      By: uckyo
      Palladium is traded on a precious metals exchange.