Gold and Silver Markets Are Hot Right Now!

Men and women like to wear gold necklaces and rings. Gold is considered to be a precious commodity.But have you ever thought of trading gold? Read this article to know why this might the best time to trade gold.

Gold prices recently breached the historical barrier of $1200 per ounce. For the last many years,the gold market is in a secular uptrend. Why gold is becoming hot? In times of financial crisis like the present global recession and during times of political uncertainty, wealthy people try to invest in safe haven assets like gold. During these times, gold is considered to be the safest investment.

Many countries have their international reserves in US Dollar. US Dollar is considered to be the international reserve currency. But the recent economic and financial turmoil in the US financial system has weakened the reserve status of US Dollar. People have started to have doubts about the strength of US Dollar. Countries like China that has more than a trillion dollar of reserves, India, Brazil and Russia want to hedge their international reserves by purchasing gold. Gold is still considered to be the ultimate currency. From time immemorial, gold has held this status and it will continue to do so in the 21st century.

So their are many big buyers of gold in the market but the supply of gold is limited. There are only a few gold mines in the world that cannot keep pace with the rising demand.China will purchase more than a hundred tons of gold in 2010. So will India, Russia and Brazil. They are big buyers. They need tons of gold. By just investing in something like 10-20 ounces of gold, you can reap the benefits when gold prices are going to rise further.

US Dollar and gold prices are negatively correlated. What this means is that when US Dollar depreciates, gold prices appreciate and vice versa. Gold trading and forex trading combined can be highly lucrative as both hedge against each other.

Commodity trading is going to make many people rich in the first few decades of 21st century. Just like gold, supply of silver is limited. Silver is used in the electronics industry. It is even used in your washing machines. So imagine the global economy coming out of its recession in the near future with the demand for silver skyrocketing. Prices of silver are expected to go higher than gold!

What can be the best method of investing in gold and silver? You can invest in gold stocks, meaning stocks of companies that mine gold. You can also invest in Gold ETFs or some commodity ETF that includes gold in its basket of commodities. You can even trade gold futures. Futures trading is risky for those who haven't traded them before but once you learn how to trade futures the profit potential is immense. Combine gold trading with forex trading and reap a windfall!

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