Precious Metals Futures Contracts

The metallic commodities are attractive because of the romance attached to them, especially gold and silver, and platinum somewhat.

Palladium, although not so well known, is also a precious metal. Copper is not a precious metal, but usually grouped with them.

They now trade on COMEX, a division of NYMEX, now a part of The CME Group.

One gold contract is 100 troy ounces. Its quoted in dollars and cents, and one tick is worth .

A silver contract is 5,000 ounces. Its quoted in cents per ounce, and one tick is half a cent, worth .

Platinum comes in contracts of 50 troy ounces, quoted in dollars and cents, with one tick .

Palladium comes in contracts of 100 troy ounces, quoted in dollars and cents, with one tick .

One contract of copper represents 25,000 pounds, and is quoted in cents per pound. One tick is .50.

Although gold is now trading at record high levels, anyone planning to trade it as a future contract should realize that golds popularity and romance, and political implications, make it volatile.

Other commodities trade strictly on the relative strength of supply and demand. Nobody attaches any mystical significance to orange juice or winter wheat. Gold does have practical uses. As a terrific conductor of electricity it has industrial uses. Plus of course its widely used in jewelry around the world, and in dentistry.

However, its a quite complicated picture, because its also held by central banks around the world, and large institutions, as a holdover from the days when the currencies of the world were pegged to a gold standard. That is over, but many countries hold on to the supplies of gold in their vaults, including the United States.

However, central banks sometimes sell their gold, which lowers its market price. Some people think theres actually a conspiracy to keep the price of gold artificially low.

Besides, buying gold futures is a lot different than simply buying a gold Krugerrand or shares in a gold mining company. No matter what happens with the long term trend of gold, a futures contract can have a lot of volatility in the near future that can wipe you out financially.

Buy a United States gold Eagle and you can put it away until the day you see gold is selling for ,000 per ounce or the financial system has collapsed. Your coin will will sit there no matter what happens to the cash price. But buy a contract of gold and it could bankrupt you next week.

Silver isnt considered quite as important as gold, but it still has a real money mystique attached to it, in addition to its economic uses as jewelry, and so on.

Dont buy gold and silver futures contracts because youre worried about the future of our fiat money. Buy them only if you are extremely familiar with the day to day business demand for them and can afford to speculate on daily price fluctuations.

Copper is thinly traded, and therefore has extreme price volatility. Stay away.

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