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COSMIC:
Precious
Metals maintain an intrinsic value and should be a part
of a major portfolio for
the purpose of diversification.
Precious metals, especially gold, can be used to
hedge against the decline of the dollar, which has
sparked an increase in the volume within metals futures
and the creation of the mini gold and mini silver
products. Metals
volume also has increased as a result of Global economic
growth, especially, The BRIC
Countries:
Brazil,
Russia,
India
and
China. This
economic growth engine has
created greater demand for
copper, iron, steel and silver.
Gold
has been the most sought after metal in the world for
hundreds of years. Gold
has a unique blend of rarity and is seen as a flight to
safety or a hedge against day-to-day uncertainties of
paper money. Gold
also plays a role in industrial markets, due to its
ability to conduct electricity and its non-corrosive
properties.
Silver
is the most consumed PRECIOUS metal of industrial raw
material. Major
industrial usages of silver are: photographic, jewelry,
and, most of all, electronics. For example, computer
screens contain silver.
Unlike gold, most silver placed into industrial
material is consumed and not always recoverable.
This makes the price of the metal highly
responsive to supply and demand dynamics.
Copper
is the third most used metal in the world and the
majority of its usage comes within the construction and
industrial machinery industries.
Many of the copper mines in the world are
government controlled, which makes the supply of the
metal susceptible to political environment of these
countries, which can lead to a Contango. situation in
futures. Contango
arises when the futures price is above expected future
spot price. Consequently, the price will decline to the
spot price before delivery.
We
primarily use metal futures as a position trading
device, mostly applying a trend following type system
that utilizes the Derivative Concepts proprietary
technical indicators and combines them with key
Fibonacci inflections generated from monthly, weekly,
and daily charts. In order to confirm retracement and to
determine when to re-enter in the direction of the
long-term trend, we rely highly on weekly Commitment of
Traders [COT] to reveal preponderance of commercial
longs or shorts.
Note: There are two types of metal traded on the
exchanges: precious and industrial. Gold, Platinum
and Silver are interesting; however, these entities are
better suited to swing or core trading while those of us
are intrigued with intraday volatility.
A major source for learning to trade gold is a DayTradersUSA
talk by Tom
Loge'.
DISCLOSURE:
The
High Degree of Leverage Often Obtainable in Commodity
Trading Can Work against You As well As for You. Use of
Leverage Can Lead To Large Losses As Well As Gains.
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