It seems like investors wants to get into the precious metals market and buy metals- and why not?  Gold prices continue to move higher in the uncertain economic times we are in.  Whether it is a hedge against inflation, or a speculative play, the precious metals futures can be inviting to invest your money.  Remember that you should only use money that you can afford to lose or within your means as the precious metals futures markets can quickly go against you in these volatile times.

Trading the precious metals futures there is a price in USD, buy limits- stops, and sell limits-stops.  Futures markets mean you trade these precious metals futures months in advance and they expire at the end of their trading month.  For instance, say we are headed into March right now, the next available precious metals futures contract would be April, 1 month in advance and would expire at the end of March.  Also in precious metals futures if you were to buy April Gold and hold it until expiration, then you would be forced to take delivery from the seller who sold you the specific contract.  Don’t think that you can get out of this binding agreement because you can’t, as there will be the exact amount of Gold that you paid for at your doorstep, and a hefty bill.  Don’t worry however as 90% of the precious metals futures markets liquidate before delivery can occur.  The precious metals futures market is a place to hedge and speculate.

You can also sell Gold contracts without having to “borrow” contracts from someone else like you see in the equity markets.  This is why all futures accounts are margin accounts.  And as for margin, you can have more leverage trading in a futures account because there is substantially less margin to put up..  Usually the standard deposit is around 10%, so you can essentially control 100% of the contract by putting 10% down.  With that great advantage comes great risk.  You better have enough money in your account because if the commodity does go against you, your clearing house will give you a margin call on the precious metals futures position, and if you can’t get the cash to bring your account above the margin call your precious metals futures position will be liquidated immediately and you will take the realized loss.

Trading in futures and options involves a substantial degree of a risk of loss and is not suitable for all investors. Past performance is not indicative of future results.