COMMODITIES

4 Brilliant Reasons To Trade In Gold [Spoiler:

Warren Buffett Disagrees]

Start Trading Gold Today With CFDs

Contents
 4 Reasons To Trade Gold
 How Do Gold Investments Work?
 Should I Invest in Gold?
 What Do the Experts Think About Gold?
 How to Trade Gold
 Gold Trading & Investing Methods Compared
 Top 3 Gold CFD Brokers
 Top 5 Gold ETFs by Assets Under Management
 Top 5 Gold Stocks by Market Capitalization
4 Reasons To Trade Gold

Investors purchase gold for a variety of reasons, but the following are the
most common ones:

1. Hedge against inflation

2. Hedge against global instability
3. Speculate on demand growth
4. Portfolio diversification

How Does Gold Act as an Inflation Hedge?

Gold represents a viable way to hedge against weakness in the largest global
economy – the United States.

US economic weakness is likely to spill over into other economies, and central
banks typically react by lowering interest rates and increasing the money
supply. When these remedies fail to spur demand, they can lead to significant
inflation and loss of purchasing power.
 Unlike fiat currencies, gold maintains its purchasing power in periods of
inflation.

How Does Gold Perform Amid Global Instability?

Gold generally performs well during global crises. Wars, terrorist attacks and
pandemics, for example, often produce a flight to safety. Gold generally
benefits at the expense of other assets during turbulent times.

Speculate on Rising Gold Prices

Investors optimistic about the economic prospects of developing nations such

as China and India may see gold investing as a way to profit from this view.
Gold has played an important role historically in these countries, and more
wealth will likely translate into more demand for gold.

<iframe WIDTH="600" HEIGHT="150" SCROLLING="NO"

src="//www.dianomi.com/smartads.epl?id=4315" style="width: 100%; height:
150px; border: none; overflow: hidden;"></iframe>
Diversify Your Investment Portfolio

Many traders view gold as a way to balance their investments. Historically,

gold has a lower correlation to many asset classes, which makes it an
attractive instrument to diversify.

How Do Gold Investments Work?

Think of investing in gold as a four-tiered pyramid, with the safest tier as your
foundation (at the bottom) and then the risk (and reward potential) rises as
you climb upward on the pyramid.

1. Insurance – gold bullion in your possession.

2. Investment / Saving – gold bullion on deposit, gold certificates, allocated gold
accounts.
3. Investment – producing gold mining company shares, gold ETFs.
4. Speculation – gold CFDs, gold explorer shares, gold futures, gold options.
Should I Invest in Gold?

The following is not investment advice, it's intended for information

only. We lay out a number of the reasons for and against investing or
trading gold, it is up to you to make up your mind or seek professional
advice.

As with any investment, there are both risks and rewards to investing in gold.
In the case of both economic calamities and geopolitical turmoil, gold may
provide portfolio protection. For this reason, traders might consider investing
at least a small portion of their assets in gold.

Gold also offers traders a way to cash in on strength in emerging markets.

Many emerging economies have experienced long periods of economic and
political instability, meaning citizens have probably experienced devaluations
in their local currencies and are less likely to trust fiat currencies.

As wealth expands in these economies, so too should demand for gold.

Investors who want exposure to growth in emerging economies without
investing in local stock and bond markets in these countries should consider
gold.

Investing in gold, however, is not without risks. Strength in the US dollar and
fiscal hawkishness from central banks may lead to significant price declines
for gold. A slowdown in China and India or large sales of gold reserves by
central banks could also cause the price to head lower.

Finally, traders should consider that gold is a commodity that is subject to the
whims of the market. If trader sentiment toward gold sours, the price will
head lower.

Never invest more than you can afford to lose.

What Do the Experts Think About Gold?

Investment experts have divided opinions on gold investing.

Legendary trader Warren Buffett holds a longstanding negative opinion of

gold. Buffett argues that gold doesn’t have earnings or pay dividends and is
therefore inferior to stocks.
 “Gold gets dug out of the ground in Africa, or someplace. Then we melt it down,
dig another hole, bury it again and pay people to stand around guarding it. It
has no utility. Anyone watching from Mars would be scratching their head.”
Warren Buffett – on why he doesn't invest in gold
Buffett has a simple tenet when it comes to picking winning securities. “All
there is to investing,” he says, “is picking good stocks at good times and staying
with them as long as they remain good companies.” Sticking with that
philosophy, Buffett's results speak for themselves. A $10,000 investment in
Berkshire Hathaway in 1965 would be worth nearly $50 million today.

But one investment Buffett won’t stash in his portfolio is gold, a stance that
has vexed gold bugs for decades.

Gold has most of the value components Buffett likes to see in each of his
portfolio holdings:

1. Exposure to a high-quality, growth-oriented investment

2. Protection against economic volatility
3. Leverage in gaining quick cash liquidity

Famed hedge fund manager, Jim Rogers, has long argued that every trader
should hold physical gold coins in their portfolio as a hedge against the
collapse of other assets.
Superstar hedge fund manager, George Soros, has often held positions in
gold mining stocks. Soros and hedge fund manager Stanley Druckenmiller see
irresponsible actions by the Federal Reserve Bank as a reason to hold gold
assets.

How to Trade Gold

Gold traders have several ways to invest in the commodity:

Gold Trading & Investing Methods Compared

Comple
Metho xity
Stora Secur Expirat Manage
d of Rating Levera Regula
ge ity ion ment
Investi (1 = ge ted
Costs Costs Date Cost
ng easy, 5
= hard)

Gold 1 YES YES NO NO NO NO

Bullio
n

CFDs 3 NO NO NO NO YES YES

Future 5 NO NO YES NO YES YES

s

Optio 5 NO NO YES NO YES YES

ns
 Comple
Metho xity
Stora Secur Expirat Manage
d of Rating Levera Regula
ge ity ion ment
Investi (1 = ge ted
Costs Costs Date Cost
ng easy, 5
= hard)

ETFs 2 YES* YES NO YES NO** YES

Shares 2 NO NO NO NO YES YES

*Storage costs are passed on to traders in the form of management fees.

**Some metals ETFs offer exposure to 2x or 3x the movement in gold prices.

Gold Bullion

One way to speculate on the price of gold is to hold physical gold bullion
such as bars or coins. While this is the most direct way to invest in gold,
investing in bullion requires a secure storage facility. Ultimately, the cost of
this storage could make holding physical gold an expensive proposition.

Here are some online gold bullion dealers you might consider:

1. BullionVault.com
2. JMBullion.com
3. APMEX.com
4. Moneymetals.com

Gold CFDs

There is a way to trade gold that some may find beneficial in many ways to
the alternatives discussed in this guide. Through a derivative instrument
known as a contract for difference (CFD), traders can speculate on gold prices
without actually owning physical gold, mining shares or financial instruments
such as ETFs, futures or options.

The value of a CFD is the difference between the price of gold at the time of
purchase and the current price. In other words, the value of a CFD increases
as the price of gold increases, but falls when gold prices decline.

CFD traders open an account with a regulated broker and deposit funds. The
funds serve as a margin against the change in the value of the CFD.

Investing in CFDs does not require the trader to pay for gold storage or roll
futures contracts forward every month. Traders also don’t have to worry
about getting the timing and size of markets move correct in order to profit
on their trades.

CFDs are still high-risk financial instruments, however, and your capital is at
risk so you should be an experienced trader or seek out a broker that offers a
demo account to allow you to develop your knowledge in advance of risking
real money.

Top 3 Gold CFD Brokers

Our The Read

Broker The Bad Sign Up
Rating Good Review

Tight No phone Start

spreads support, TradingCFD
on gold*, only email Service.
easy to and live 80.6% lose
use chat. money.
 Our The Read
Broker The Bad Sign Up
Rating Good Review

platform.

Easily $25 Start e

copy withdrawal Trading65%
leading fee is quite of retail
traders. high trader
compared accounts
to other lose money
brokers. when
trading
CFDs with
this
provider.**

Great Wider Start Trading

technical spreads on
analysis gold
features. compared
with other
brokers.*

*The spread is the difference between the buy and sell price of a financial
instrument. A lower or “tighter” spread is better for the trader, a higher or
“wider” spread generally means the broker is making more on the
trade. Spreads are variable.

**You should consider whether you can afford to take the high risk of losing
your money.
 Start Trading Gold

Start trading today at Plus500.com.

One of the leading CFD brokers for trading precious metals, like gold, is Plus
500. Here's why:

 No commission on trades (other charges may apply)

 Free demo account
 Easy to use (mobile-friendly) platform
 Industry-leading risk management tools
 Trade gold and hundreds of other CFDs
 Your funds are safe – publicly listed company regulated by the UK's Financial
Conduct Authority and Cyprus' Securities and Exchange Commission

Start Trading at Plus500.com

CFD Service. 80.6% lose money.

Important: CFDs are complex instruments and come with a high risk of
losing money rapidly due to leverage. Between 74-89% of retail trader
accounts lose money when trading CFDs. You should consider whether
you understand how CFDs work and whether you can afford to take the
high risk of losing your money.

Gold Futures

These gold trading derivative instruments allow traders to speculate on the

future price of gold through the purchase of exchange-traded contracts.

Futures markets offer traders a liquid and leveraged way to trade gold.
However, leverage can lead to margin calls when prices decline. Also, futures
contracts come with definite expiration dates. This requires the trader to
either accept delivery of gold or roll the contract forward to the next month.
In other words, trading futures requires active and onerous maintenance of
positions.

How Can I Trade Gold Futures?

Gold futures trade on the COMEX, which is part of the Chicago Mercantile
Exchange. The following is a summary of the contract specifications for gold
(symbol GC):

Gold

Contract 100 troy ounces

Unit

Price Quote U.S. Dollars and Cents per troy ounce

Min. Price $0.10 per troy ounce

Fluctuation

Listed Trading is conducted for delivery during the current calendar

Contracts month; the next two calendar months; any February, April,
August, and October falling within a 23-month period; and
any June and December falling within a 72-month period
beginning with the current month.

Settlement Deliverable
Method

Gold Options

Like futures, options are a leveraged derivative instrument for trading gold.
However, options traders must be correct on the timing and the size of the
market move to make money on a trade. Options traders may find that they
were right about the direction of the gold market and still lost money on their
trade.
Gold ETFs

While ETFs may seem like the perfect proxy for investing in gold, traders
should be aware of their considerable risks and costs. Many ETFs invest in
gold futures or options, which have the risks outlined above. As for the ETFs
that invest in gold itself, these funds incur the same storage and security costs
just as individuals do. Ultimately, these costs get passed on to the trader.

Finally, ETFs are financial instruments that trade like stocks. When stock
markets decline, ETFs are not immune from the same pressures that drag
stocks down. Investors may find that their investment in gold is behaving
more like a stock investment.

Here are some leading gold ETFs (based on assets under management):

Top 5 Gold ETFs by Assets Under Management

ETFS Physical PowerShare

SPDR Gold iShares Van Eck Merk
Swiss Gold s DB Gold
Trust Gold Trust Gold Trust
Shares Fund

 GLD  IAU  SGOL  DGL  OUNZ

USD12 USD1 USD12 USD3 USD12.5
0.59 2.23 3.13 9.18 2

Top 5 Gold Stocks by Market Capitalization

Purchasing shares in exploration and mining companies supposedly allows

traders to make a leveraged bet on the price of gold. In theory, many of the
costs of running a mining company are fixed. Therefore, as the price of gold
increases, the additional revenues should flow to the bottom line in the form
of profits. Markets assign a multiple to these profits, so in bull markets traders
should make more money from owning shares.

The flaw in this argument, however, is that gold prices rarely rise in a vacuum.
When the price of gold increases, usually oil and other commodities needed
to run a mining company rise as well. In fact, mining shares have rarely if ever
outperformed gold prices during bull markets.

Here are a few leading gold explorer and mining stocks:

Numb
Interes
Curren Foun er of
Overview Listings ting
t Price ded Emplo
Fact
yees

Barrick Gold Largest Toronto 1983 11,000 Origin

gold (TSX)New ally
mining York founde
company (NYSE) d as an
in the oil and
World, gas
headquar compa
tered in ny.
Toronto.

Newmont NEM US gold New York 1916 34,000 Newm

Mining USD31 mining (NYSE) ont is
.63 company the
based in only
" Colorado. gold
compa
ny in
the
Standa
rd &
Poor's
 Numb
Interes
Curren Foun er of
Overview Listings ting
t Price ded Emplo
Fact
yees

500
Index

Polyus Gold PLZL.IL Russian London 2006 4000 The

USD38 gold (LSE)Mos largest
.68 mining cow gold
company (MCX) miner
headquar in
tered in Russia.
Moscow.

AngloGold AU Johannes Johannes 2004 62,000 The

Ashanti USD12 burg burg compa
.32 based (JSE)New ny has
global York 17
miner and (NYSE)Sy mines
explorer. dney in 9
(ASX) countri
es.

Newcrest NCM. Australia's Sydney 1966 1,500 Origin

Mining AX leading (ASX) ally a
AUD2 gold subsidi
5.35 mining ary of
company. the
Newm
ont
 Numb
Interes
Curren Foun er of
Overview Listings ting
t Price ded Emplo
Fact
yees

Mining
Compa
ny.

What Are Some Gold Trading Strategies and Tips?

There are countless strategies traders use to determine when to buy and sell
gold. However, we outlined three of the more popular tools, tips and
strategies traders use in constructing gold trades:

Follow the Yen

The Japanese yen has historically enjoyed an extremely high correlation with
the price of gold. In fact, charts of gold priced in dollars over multiple
timeframes typically look almost like the mirror opposite of the price of
USD/JPY.

The main reason for this tight relationship is the perception that both gold
and the yen are safe havens.

In addition, both the USD/JPY and gold price are largely a function of real
interest rates and perceptions about where they are headed. Traders looking
for setups in gold may want to analyze the yen to see if similar setups prevail
in the currency.

The Gold/Silver Spread

One popular trading strategy employed by some longer-term traders is the

gold/silver spread. Historically, these two metals have both been viewed as
stores of value, although silver has developed many more commercial uses,
perhaps as a function of its lower price.
 Some traders choose to track this ratio and develop pairs trading strategies
based on which asset is cheaper relative to the other. However, just as with
the yen or with any pairs trade, there is no guarantee that historical
correlations will remain the same in the future.

Gold Stocks Pairs Trade with Gold

Another popular strategy is to trade gold as a pairs trade against gold stocks.
Some traders track the historical relationship between the price of gold and
the price of gold stock indices such as the Philadelphia Gold and Silver Sector
Index (XAU) or the AMEX Gold BUGS (Basket of Unhedged Gold Stocks) Index
(HUI).

The idea is that gold stocks – particularly those companies that don’t hedge
their exposure to the metal – are a leveraged way to purchase gold and that
the two asset classes should be positively correlated.

How Should Beginners Invest in Gold?

As we've seen there are several ways to invest in gold, and for beginners, each
of these requires some homework:

1) Bullion

The most direct way to own gold is through the physical purchase of bars and
coins. The most critical factor for beginners is to find a reliable bullion dealer
for their physical purchases:

 Reputation: There are many online resources for conducting due diligence.
Make sure your bullion dealer has an unblemished track record and positive
feedback from customers.
 Client References: Ask for references from clients and speak to them about
their purchasing experiences.
 Compare Prices: A reputable dealer will charge an equitable price for coins and
bars. This price will vary by item, but with a little comparison shopping, you can
make sure you are paying a fair price. Bear in mind, physical gold prices can
vary from futures or ETF prices.
2) ETFs

A critical component of ETF investing is the fees funds charges to clients.

Funds incur costs such as bullion storage in the case of physical gold or
trading costs in the case of ETFs that invest in gold futures. These costs get
passed on to ETF buyers and are part of the management fee.

Sites such as ETF database (http://etfdb.com/) can provide a wealth of

information on funds including costs. Make sure to do an apples-to-apples
comparison when evaluating funds. That is, compare funds with other funds
according to their methods of buying gold (i.e., futures, equities, bullion,
etc.).

3) Equities

Precious metals equities are not only affected by the price of gold, but also by
the vagaries of the stock market. However, gold traders can protect
themselves by investing in companies with successful track records and
experienced management teams. Company annual reports and analyst
reports are a great place to start your investigation.

4) CFDs

Beginners purchasing gold through CFDs should first and foremost make sure
they are working with a regulated broker with a good reputation. Traders
should also carefully investigate the brokers’ fees and charges so they can
compare them with other providers.

What Are Some Gold Trading Basics?

Here are a few tips traders may want to keep in mind when trading gold.
However, these tips should not be construed as investment advice. The
individual must determine on their own what’s right for their unique
situations:
 Purchase size: A popular reason for holding gold is as a safe haven or
insurance for your portfolio. Therefore, consider how much exposure you want
to have. Many new traders get carried away and take outsized positions in the
metal.
 Physical gold: Some traders avoid physical gold because it’s easy to gain
exposure through stocks or ETFs. However, if insurance against a financial
debacle is your reason for holding gold, then it may make sense to have a
portion of your investment in physical gold.
 The dollar: Probably the single most important data new traders should focus
on is the dollar and the factors that move the currency markets. These factors
are likely to have the biggest effects on gold prices.
 Be a Contrarian: Perhaps more than any other asset, gold prices are often
subject to a herd mentality. When sentiment for gold is at its worst, it often
represents a good time to buy. Similarly, when the markets become too bullish
about gold, it often means it’s time to sell. There are a variety of ways of
measuring sentiment including the Commitment of Traders reports published
by the Commodity Futures Trading Commission (CFTC).
 Take a long-term view: Gold is a volatile asset and can be subject to some wild
price swings. At the same time, the metal has a long trading history. Traders
may want to pay attention to key long-term support and resistance levels for
clues about where the metal is heading next.
 Silver Trade 2019: This Valuable Metal Could See Investors Through Hard Times.
Here's Why

Start Trading Silver Today with CFDs

Contents
 4 Reasons You Might Invest in Silver
 Should I Invest in Silver?
 What Do Experts Think About Silver?
 How Can I Invest in Silver?
 Silver Trading & Investing Methods Compared
 4 Leading Silver ETFs
4 Reasons You Might Invest in Silver

Investors purchase precious metals such as silver for a variety of reasons, but the
following are most common:

1. Risk Mitigation
2. Bet on Industrial Strength in the Global Economy
3. Bet on Diminishing Supply
4. Bet on Investment Demand

Using Silver to Mitigate Risk

One of the best reasons for investing in silver is that it might provide protection
during economic crises.

Central banks generally react to crises by lowering interest rates and increasing the
money supply. These actions have the potential to weaken currencies and erode
confidence in stock and bond markets.
Unlike financial assets, physical assets such as silver can’t be created on paper. There
is a limited above-ground supply of silver. For this reason, it is far more likely than
financial assets to hold its value during periods of turmoil.

Bet on Industrial Strength in the Global Economy

Silver is vital to many industries, so strength in the global economy should translate
to higher prices.

In particular, silver demand for jewelry is strong in India. As these and other
emerging market countries continue to grow, their demand for silver could increase
sharply.

<iframe WIDTH="600" HEIGHT="150" SCROLLING="NO"

src="//www.dianomi.com/smartads.epl?id=4315" style="width: 100%; height:
150px; border: none; overflow: hidden;"></iframe>
Can You Bet on the Diminishing Supply of Silver?

The supply picture for silver might be one of the most attractive reasons for investing
in the commodity.

Depressed prices for silver combined with high mining costs have caused production
numbers to fall in recent years. Unless prices pick up substantially, many mining
projects will remain on hold.

At the same time, silver scrap supply remains at multi-year lows. The combination of
low scrap supply and low mine production could be a recipe for higher prices.

Will the Investment Demand for Silver Increase?

While industrial demand for silver remains fairly consistent, investment demand can
be much more variable.

Increases in investment demand can result in significant increases in silver

prices, particularly when supply remains constrained.

One reason investment demand might pick up is the gold-silver ratio, which is
approaching its highest level in 10 years. In other words, gold is historically
expensive relative to silver.
 Investors may want to buy silver as a bet that this ratio will head lower.

Should I Invest in Silver?

All investments have potential risks and rewards, so traders should take all
information into account before investing.

However, investing in silver, particularly as part of a broad asset diversification plan,

could be beneficial for several reasons:

1. Investors should consider silver for its potential to mitigate portfolio risk:
 Silver could perform better than stocks and bonds when there is global political unrest.
 Silver could perform better than financial assets during periods of hyperinflation.
 Silver may even perform better during periods of severe deflation, particularly if
central banks respond by dramatically devaluing their currencies.
2. Buying silver is a way to bet on strength in emerging countries, many of which have
experienced prolonged political instability. As a result, people in emerging economies
are less likely to trust fiat currencies and more likely to want hard assets such as silver.
3. Silver is a way to bet on growing global industrial demand for metals.

However, investing in silver could fail if certain events materialize:

1. A strong US dollar
2. A slowdown in China and India
3. Substitution from silver into other metals by industries such as electronics and jewelry

What Do Experts Think About Silver?

One market watcher argues that depressed silver prices, particularly relative to
gold, could be the catalyst
-

Commerzbank believes that low prices could bring both investment and industrial
buying:

…silver has catch-up potential vs. gold. The positive economic development is
likewise an argument in favor of silver because it means that industrial demand is
likely to become even more dynamic – which accounts for more than half of total
silver demand. Given that it is entirely conceivable that demand for bars and coins
will be stronger, as well as demand from ETF [exchange-traded-fund] traders,
demand growth is likely to be even more pronounced.
– Commerzbank Research Report
Another silver analyst agrees, but sees potential for gains in both gold and silver:
… essentially, we see a once-in-a-decade opportunity in the gold and silver market.
– Taki Tsaklanos, lead analyst at Investing Haven
How Can I Invest in Silver?

Investors have several ways to invest in silver:

Silver Trading & Investing Methods Compared

Complex
Metho ity
Stora Securi
d of Rating Expirati Managem Levera Regulat
ge ty
Investi (1 = on Date ent Cost ge ed
Costs Costs
ng easy, 5 =
hard)

Silver 1 YES YES NO NO NO NO

Bullio
n

Future 5 NO NO YES NO YES YES

s

Option 5 NO NO YES NO YES YES

s

ETFs 2 YES* YES NO YES NO** YES

Minin 2 NO NO NO NO YES YES

g
Shares
 Complex
Metho ity
Stora Securi
d of Rating Expirati Managem Levera Regulat
ge ty
Investi (1 = on Date ent Cost ge ed
Costs Costs
ng easy, 5 =
hard)

CFDs 3 NO NO NO NO YES YES

*Storage costs are passed on to traders in the form of management fees.

**Some metals ETFs offer exposure to 2x or 3x the movement in silver prices.

Silver Bullion

Physical silver bullion, such as bars or coins, is the most direct way to invest in
silver. However, investing in bullion requires a secure storage facility. Ultimately,
the cost of this storage and the low value-to-weight ratio could make holding physical
silver an impractical proposition.

Silver Futures

The COMEX division of the Chicago Mercantile Exchange (CME) offers a

contract on silver that settles into 5,000 troy ounces.

The contracts trades globally on the CME Globex electronic trading platform and
have a variety of expiration months.

Futures are a derivative instrument through which traders make leveraged bets on
commodity prices. If prices decline, traders must deposit additional margin in order
to maintain their positions. At expiration, the contracts are physically settled by
delivery of silver.

Investing in futures requires a high level of sophistication since factors such as

storage costs and interest rates affect pricing.

Silver Options on Futures

The Intercontinental Exchange (ICE) offers an options contract on silver futures.

Options are also a derivative instrument that employ leverage to invest in

commodities. As with futures, options have an expiration date. However, options also
have a strike price, which is the price above which the option finishes in the money.

Options buyers pay a price known as a premium to purchase contracts. An options bet
succeeds only if the price of silver futures rises above the strike price by an amount
greater than the premium paid for the contract. Therefore, options traders must be
right about the size and timing of the move in silver futures to profit from their trades.

Silver ETFs

ETFs are financial instruments that trade as shares on exchanges in the same way that
stocks do.

While ETFs may seem like the perfect proxy for investing in silver, traders should be
aware of their considerable risks and costs.

Many ETFs invest in silver futures or options. As for the ETFs that invest in silver
itself, those funds incur the same storage and security costs that individuals do.
Ultimately, these costs get passed on to the trader.

When stock markets decline, ETF prices sometimes decline as well. Investors could
find that their silver investment is behaving like a stock investment.

Who are the 4 leading silver ETFs?

4 Leading Silver ETFs

E-TRACS UBS
iShares Silver ETFS Physical PowerShares DB
Bloomberg CMCI Silver
Trust Silver Shares Silver Fund
ETN

SLV SIVR USD14.52 DBS USD22.02 USV-IV USD18.59

USD14.00
 E-TRACS UBS
iShares Silver ETFS Physical PowerShares DB
Bloomberg CMCI Silver
Trust Silver Shares Silver Fund
ETN

Shares in Silver Mining Companies

Purchasing shares in silver mining companies theoretically allows traders to make a

leveraged bet on the price of silver:

 Many of the costs of running a mining company should be fixed.

 As the price of silver increases, the additional revenues should flow to the bottom line
as profits.
 Markets assign a multiple to these profits, so in bull markets traders should make more
money from owning shares.

However, silver prices rarely rise in a vacuum.

When the price of silver rises, mining costs generally rise as well. In fact, mining
shares have rarely outperformed silver prices during bull markets.

Current
Company Description Exchange
Price

Wheaton Precious WPM Canadian silver and gold New York

Metals Corp. USD21.39 mining and streaming (NYSE)
company.

Pan American Silver PAAS Canadian company New York

 Current
Company Description Exchange
Price

Corp. USD12.62 engaged in exploration, (NYSE)

extraction, processing and
refining of silver from
mines.

SSR Mining SSRM Canadian company that New York

USD11.73 acquires, explores, (NYSE)
develops and operates
/ precious metals properties
in the Americas

CFDs

One way to invest in silver is through the use of a contract for difference (CFD)
derivative instrument. CFDs allow traders to speculate on the price of silver. The
value of a CFD is the difference between the price of silver at the time of purchase
and its current price.

Many regulated brokers worldwide offer CFDs on silver. Customers deposit funds
with the broker, which serve as margin. The advantage of CFDs is that traders can
have exposure to silver prices without having to purchase shares, ETFs, futures or
options.

How to find Silver on Plus500 – illustrative prices only.

Ready to Start Trading Silver?

Start trading today at Plus500.com.

One of the leading CFD brokers for trading precious metal CFDs, like silver, is Plus
500. Here's why:
 No commission on trades (other charges may apply)
 Free demo account
 Easy to use (mobile-friendly) platform
 Industry-leading risk management tools
 Trade silver and hundreds of other CFDs
 Your funds are safe – publicly listed company regulated by the UK's Financial Conduct
Authority and Cyprus' Securities and Exchange Commission

Start Trading at Plus500.com

CFD Service. 80.6% lose money.
Important: CFDs are complex instruments and come with a high risk of losing
money rapidly due to leverage. Between 74-89% of retail trader accounts lose
money when trading CFDs. You should consider whether you understand how
CFDs work and whether you can afford to take the

Oil Trading: What You Need To Know About Oil CFDs In 2019

Start Trading Oil Today With CFDs

4 Reasons To Trade Oil

Crude oil investing has several advantages over traditional equities for certain trader
classes. Depending on your investment objectives, oil trading can be used for:

1. Diversification
2. Safe Haven
3. Inflation Hedging
4. Speculation

Diversify Your Investment Portfolio

Adding oil commodities to an equities-only or fixed-income portfolio can lower the

overall volatility, because there is non-correlation between these asset classes.
Commodities like oil are useful in countering price movements in a traditional
portfolio.

Is Oil a Safe Haven?

Commodities are helpful during periods of global economic uncertainty because they
tend to retain their value even during market turbulence. Investing in oil can be a
strategy against exposure to loss if the market takes a downturn.

How Does Oil Act as an Inflation Hedge?

Commodities have intrinsic value independent from currency, which means they hold
their value even as the value of currency falls in an inflationary environment. This is
especially true of oil, given the constant and reliable global demand.

Speculating On Oil Prices

There are often wild swings in commodities prices; investing in oil futures and
derivatives is a way to profit quickly from movement in oil prices, which are
notoriously volatile. It’s not unheard of for prices to move 5% or 10% in a single
trading session. Wall Street speculators aren’t the only ones betting on oil volatility;
many major institutional traders buy oil-linked investments for their endowment and
pension funds.

Perhaps the most significant advantage of trading oil is that demand is virtually
guaranteed. There may be fluctuations in supply—and therefore price—but for the
foreseeable future there is demand is unlikely to flatline or disappear.

Experienced traders with a high tolerance for risk can make substantial profits on low
capital outlays, especially with CFDs, but also with oil ETFs and futures contracts.

The major risk with commodities in general—and oil investing in particular—is the
extreme volatility in the market. The risk of loss is high, especially with derivatives,
due to factors entirely beyond the trader’s control. It is not an investment for people
with risk aversion, and oil trading should be just one strategy in a well-diversified
portfolio.

How to Trade Oil

Trading oil requires a bit more consideration than other types of assets because there
are many product choices you can use to get into the market, from pure-play oil
derivatives to oil and gas company equities. Each has its own advantages and set of
complicating issues.

Most oil commodities traders will choose one of the following options:

Complex
Metho
ity Stora Securi
d of Expirati Managem Levera Regulat
Rating ge ty
Investi on Date ent Cost ge ed
(1=easy, Costs Costs
ng
5=hard)

Buy 5 YES YES NO NO NO NO

Oil
Barrels

CFDs 3 NO NO NO NO YES YES

Future 5 NO NO YES NO YES YES

s

Option 5 NO NO YES NO YES YES

s

ETFs 2 YES YES NO YES NO YES

 Complex
Metho
ity Stora Securi
d of Expirati Managem Levera Regulat
Rating ge ty
Investi on Date ent Cost ge ed
(1=easy, Costs Costs
ng
5=hard)

Shares 2 NO NO NO NO YES YES

Oil CFDs

One of the easiest ways to start trading is with oil CFDs.

A “Contract For Difference”, or CFD, is basically a contract between an trader and a

broker to exchange the difference in value between when a trade is entered and
exited. Standard leverage varies, although lower-end margins are more typical. Most
CFD brokers provide the facility to speculate on the price of oil futures contracts
but contract sizes are typically much smaller than standard futures contracts; a crude
oil CFD order can be for as little as 25 barrels (depending upon the firm) compared to
1,000 barrels for a standard futures contract.

CFD trades are frequently commission-free (the broker makes a profit from the
spread), and since there is no underlying ownership of the asset, there is no shorting
or borrowing cost. Oil is a global 24-hour market with constantly moving prices; it’s
an ideal medium for day traders to profit from fast movement. It’s also a highly liquid
market, so it’s easy to get in or out, regardless of the size of the trade.

Here’s how CFDs work: This is NOT a trading recommendation

You’re bullish on WTI, so you decide to invest in oil CFDs at the quoted price of
$60.25 to $60.50 (the lower price is for a short contract, the higher for long).

To buy 10 long CFDs on 3% margin, you would need $1,815 in your account ($60.50
[long price] x 10 [number of contracts] x 100 [number of barrels in a standard
contract] x 0.03 [margin percent]). You would then “control” $60,500 worth of oil for
your $1,815.

That afternoon, you notice the price is up to $62.50 to $62.75, so you exit the trade,
which now has a value of $62,750. You pocket roughly $2,250 on the deal. Of
 course, if the price ticks down, the degree of leverage works against you rather
quickly.

CFDs are complex financial products, they aren't available in the US and are only
recommended for experienced traders. You will not own the oil itself.

We've reviewed dozens of CFD brokers based on 10 key criteria such as fees,
functionality and security (see full list).

Plus500 is one of the top brokers for oil CFD trading.

(CFD Service. 80.6% lose money.)

 No commission on trades (other charges may apply)

 Free demo account
 Easy to use (mobile-friendly) platform
 Industry-leading risk management tools
 Trade oil and hundreds of other markets
 Your funds are safe - publicly listed company regulated by the UK's Financial Conduct
Authority and Cyprus' Securities and Exchange Commission

[Important: Your capital is at risk. [/box]-->

Start Trading Oil CFDs Today

 No commission on trades (other charges may apply)

 Free demo account
 Easy to use platform & iPhone/Android apps
 Industry-leading risk management tools
 Trade hundreds of markets with CFDs
 Your funds are safe – regulated by the UK Financial Conduct Authority

Start Trading Free at Plus500.com

CFD Service. 80.6% lose money.
Important: CFDs are complex instruments and come with a high risk of losing
money rapidly due to leverage. Between 74-89% of retail trader accounts lose
money when trading CFDs. You should consider whether you understand how
CFDs work and whether you can afford to take the high risk of losing your money.

Oil Shares

This is perhaps the least complex method of crude oil investing; you simply purchase
equities in a company you believe will remain profitable. It’s important to keep in
mind that although there is usually a correlation between the price of crude and oil
company profitability, this isn’t always the case—and disasters like the BP oil spill
can do serious damage to an otherwise solid investment.

Interested in oil stocks? Here are the 5 biggest listed oil companies:

Number
Current Found of Interesti
Overview Listings
Price ed Employ ng Fact
ees

Sinopec SHI Chinese oil Shangha 2000 350,000 Largest

USD46. and gas i (SSE), + oil
35 company Hong refiner
based in Kong in Asia
Beijing (SEHK),
New
< York
(NYSE),
London
(LSE)
 Number
Current Found of Interesti
Overview Listings
Price ed Employ ng Fact
ees

ExxonMobil XOM American New 1999 80,000+ Largest

USD82. multinatio York refiner
26 nal oil and (NYSE) in the
gas World
corporatio with a
n capacity
of nearly
6m
barrels
per day

Royal Dutch RDS-A British- London 1907 90,000+ Shell

Shell USD63. Dutch (LSE), have
62 multinatio Amsterd over
nal am 40,000
headquarte (Eurone service
red in The xt), New stations
Netherland York worldwi
s (NYSE) de

BP BP Headquart London 1908 74,000+ Burmah

USD43. ered in (LSE), Oil
96 London Frankfur Compan
but the t (FWB), y, the
USA New company
houses the York that
lion share eventuall
of its y
 Number
Current Found of Interesti
Overview Listings
Price ed Employ ng Fact
ees

operations (NYSE) became

BP, was
the first
to
discover
oil in the
Middle
East

Total SA TOT French Paris 1924 100,000 Total

USD55. multinatio (CAC), + has over
84 nal New 900
<p- York subsidiar
(NYSE), ies
Amsterd covering
am all areas
(Eurone of
xt) energy

Oil ETFs

Exchange-traded funds or ETFs are one of the ways traders can gain a piece of the oil
market. You can choose funds that track the performance of oil prices using futures
contracts or funds tied to a basket of oil company equities. Here are the 5 leading oil
ETFs based on their assets under management:

iPath S&P ProShares ProShares

United
GSCI Crude Ultra PowerShares UltraShort
States Oil
Oil Index Bloomberg DB Oil Fund Bloomberg
Fund
ETN Crude Oil Crude Oil

USO OIL UCO DBO SCO

 iPath S&P ProShares ProShares
United
GSCI Crude Ultra PowerShares UltraShort
States Oil
Oil Index Bloomberg DB Oil Fund Bloomberg
Fund
ETN Crude Oil Crude Oil

USD13.53 USD66.37 USD25.12 USD11.10 USD14.32

Oil Futures

A futures contract is simply an agreement to buy or sell a quantity of oil at a specified

date for a specified price. These are standardized instruments for WTI and Brent that
trade on the NYMEX; the standard contract is for 1,000 barrels of oil, so a $1
movement in price is equal to $1,000. Most oil futures contracts require about a 10%
margin, which is rather high given the cost of 1,000 barrels of oil, although margins
can change depending on volatility—don’t be surprised to get a margin call on oil
futures contracts.

Futures contracts are settled by physical delivery of the crude oil, which is something
most traders don’t want to deal with, so it’s important to keep track of delivery and
expiration dates and either roll the position over another month or close it entirely
before the contract expires.

Trading oil futures is typically for professional traders due to the high cost and
complexity involved. However, contracts for difference or CFDs provide a
convenient way to “access” the crude oil futures market, see below for a detailed
explanation.

Oil Options

With oil options, an trader essentially pays a premium for the right (not the
obligation) to buy or sell a defined amount of oil at a specified price for a specified
period of time. Crude oil options are the most widely traded energy derivative in the
New York Mercantile Exchange (NYMEX), one of the largest derivative product
markets in the world

Despite their name, the underlying of these options is not actually crude oil itself, but
crude oil futures contracts. Options in the oil market—and the commodities market in
general—are more expensive due to the high perceived volatility of commodities
prices.

BITCOINS

Is Bitcoin The New Gold? – This Guide Will Teach You How To Trade Crypto

The Ultimate Guide

Sharing is caring!

0shares

Contents [hide]

Why is Everyone Talking About Bitcoin?

What is Bitcoin?

How Are Bitcoins Made?

Who Created Bitcoin?

What is the Price of Bitcoin?

What Drives the Price of Bitcoin?

Bitcoin User Growth

How High Will The Price of Bitcoin Go?

Bitcoin Market Sentiment

Is Bitcoin the New Gold?

Should You Invest in Bitcoin?

4 Reasons to Invest in Bitcoin

3 Reasons Not to Invest in Bitcoin

How to Buy Bitcoin

What is the Best Way to Buy Bitcoin?

Can You Trade Bitcoin Futures?

Are There Bitcoin ETFs?

Does a Bitcoin IRA Exist?

Why is Everyone Talking About Bitcoin?

When people think of cryptocurrency, their first thought is usually Bitcoin or BTC. It
burst onto the scene all the way back in 2009 and has gone from strength to
strength. It is by far the most valuable cryptocurrency on the market today.

The more often it has hit the headlines the more people want to get in on the
action. Despite this popularity, most people know very little about it.

5 Incredible Bitcoin Facts You Might Not Know

Pizza was the first thing purchased with Bitcoin in 2009

All the Bitcoins in the World are worth $200 billion+. That's more valuable than
Disney

It took 7 years for Bitcoin to go from $0-$1,000, then just 8 months to go from
$1,000-$10,000

Losing access to your Bitcoin wallet means losing your Bitcoins forever

James Howells mistakenly threw away a hard-drive containing 7,500 Bitcoins, worth
over $80 million

Data from U.S. Equity Research estimates the cryptocurrency market is expected to
grow at a 32% rate by 2023.
According to RnRMarketResearch:

<iframe WIDTH="600" HEIGHT="150" SCROLLING="NO"

src="//www.dianomi.com/smartads.epl?id=4315" style="width: 100%; height:
150px; border: none; overflow: hidden;"></iframe>

Growth is propelled by the benefits of compliance-free peer-to-peer transaction,

cross-border remittance transfer, increase in use cases, volatility in the stock
market, fluctuating monetary regulations in different countries, transparency, and
immutability of the distributed ledger technology and benefits such as faster
transaction and reduction in total ownership cost.

Bitcoin leads the crypto-charge, as one Wall Street analyst estimates that the digital
currency’s price will climb to $25,000 in the next decade.

I believe there are hedge funds and very deep-pocketed individuals going into this
now, really hundreds of millions of dollars.

Ronnie Moas, founder of Standpoint Research, in a CNBC interview.

Overall, the Bitcoin market grew by 350% in 2017, a growth rate that has some
leading Wall Street financiers wondering if cryptocurrencies shouldn’t play a larger
role in the global currencies market.
I’m not endorsing or rejecting Bitcoin…But I know that folks were skeptical when
paper money displaced gold.

Lloyd Blankfein, chief executive officer at Goldman Sachs, who are considering
setting up a Bitcoin trading operation

Financial considerations aside, Bitcoin is and will continue to be a disruptive force.

Fundamentally, it solves the Byzantine Generals Problem and provides a mechanism
to establish trust between otherwise unrelated parties over an untrusted network
like the Internet. It might not be widely accepted as a currency yet, or even
mainstream, but there may come a time when BTC is as widely used as other forms
of payment.

An analogy for the current state of Bitcoin often used by enthusiasts is the early
Internet. Two of the most active evangelists of Bitcoin has been the Winklevoss
twins, for this reason.

American Internet entrepreneurs and Olympic rowers, the twins shot to fame after
the film, The Social Network, told the story of the early days of Facebook and their
involvement in its creation. Facebook paid the twins a reported $120m in cash and
shares as part of a settlement to stop the twins saying Facebook founder Mark
Zuckerberg stole their idea.

Since then they made a big bet on Bitcoin and have been working on building
Gemini – their digital asset exchange. (A+ for the name, they're twins and they
called their business Gemini.)
Twins Cameron and Tyler used their Facebook payout to invest in Bitcoin and
became the first official Bitcoin billionaires in 2017. Image via Wikipedia.

When email first came out I don't think there was a compelling argument to say you
need to use this to make your life better. It's really up to the entrepreneurs and the
technologists to build the infrastructure and applications out so that it's super easy
— and dummy-proof, so to speak — to use.

Winklevoss twins in a Business Insider interview

What is Bitcoin?

Largely defined, Bitcoin is a member of the digital currency family. It is created and
held electronically, with no actual physical Bitcoins, in the model of paper currencies
like the U.S. dollar.

Bitcoin has no central bank, government or regulatory group backing it, it is

decentralized.
It was designed to circumvent the high transaction costs associated with banks.
Bitcoin was one of the first digital currencies to use peer-to-peer technology to
process near-instant payments. Traditionally, if user A wants to send money to user
B using a bank transfer, the bank would process the payment and take a cut. With
Bitcoin, the payment is not processed by a third party but by the network. These
transactions are then stored on the blockchain. This acts as a giant, shared ledger
which calculates the balance of users’ wallets.

Acceptance rates of Bitcoin as a currency are increasing; however, Bitcoin at this

stage shares more characteristics with commodities like gold than it does with paper
currencies. In fact, the CFTC specifically labeled Bitcoin and Bitcoin Cash as
commodities.

How Are Bitcoins Made?

Unlike central banks and sovereign governments, which produce currencies in a

physical fashion, Bitcoin is created digitally, by a community of Bitcoin users.

The aim of bitcoin is to provide a way to exchange tokens of value online without
having to rely on a central authority – it's decentralized. This expanding ledger is
known as the blockchain and holds the transaction history of all bitcoins in
circulation. This ledger isn't held in one location but rather is distributed across
thousands of machines on the network.

This presents a problem though with determining if a transaction is valid. The

solution is mining.

How Does Bitcoin Mining Work?

Approximately every 10 minutes, mining computers collect a few hundred pending
bitcoin transactions known as a block and turns them into a mathematical puzzle.
Miners then compete to find the solution to the puzzle and announce this to others
on the network. Other miners check whether the puzzle has been correctly solved
and, assuming approval is granted, this block will then be cryptographically added to
the ledger and miners move on to the next block in the chain.

If a miner gets the puzzle correct, they receive Bitcoin as a reward. The amount they
receive started at 50 and halves as more blocks are processed. As of November
2017, the current reward is 12.5 and it is estimated that in 910 days the reward will
halve again.

The reward system ensures miners participate and validate transactions, which, in
turn, ensures the security of the Bitcoin network.

It’s also important for cryptocurrency traders to know that Bitcoin is limited in
capacity. By design, the Bitcoin protocol limits production to 21 million units.

Total circulation will be 21,000,000 coins. It'll be distributed to network nodes when
they make blocks, with the amount cut in half every 4 years.
first 4 years: 10,500,000 coins
next 4 years: 5,250,000 coins
next 4 years: 2,625,000 coins
next 4 years: 1,312,500 coins
etc…

Satoshi Nakamoto

Who Created Bitcoin?

Bitcoin first popped up on the digital currency radar screen on August 18, 2008,
when the website domain name bitcoin.org went public. Three months later, a
landmark paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System,” was
published by Satoshi Nakamoto, that laid out the case for Bitcoin, citing it as a peer-
to-peer network that established “a system for electronic transactions without
relying on trust”. In January 2009, the first Bitcoin trading network went live, along
with the issuance of the first-ever Bitcoins. Early Bitcoin traders dubbed Bitcoin as
the “world’s first decentralized currency.”

Who is Satoshi Nakamoto?

The identity of the creator of Bitcoin remains unknown

Satoshi Nakamoto is the creator of Bitcoin but what do we know about them? In
short, not much.

Nakamoto could be male or female or more likely a group of individuals. Many have
come forward claiming to be Nakamoto, but none have been able to provide
categorical proof.

What we do know is that Satoshi Nakamoto holds c.1 million bitcoins which means
whoever they are, they are almost certainly a billionaire.

What is the Price of Bitcoin?

You can see the price of Bitcoin below:

Bitcoin (BTC)
5.302,51 USD (-3,35%)

RANK

1
MARKET CAP

$93,68 B

VOLUME

$17,97 B

Powered by CoinMarketCap

What Drives the Price of Bitcoin?

Supply and demand

Banking blockades

Fiat currency crises

Regulatory activity

Governance

Supply and Demand

In general, Bitcoin prices are driven by old-fashioned consumer supply and demand
for the digital currency, which is exploding in growth. As stated above, there is a
limited amount of Bitcoins in circulation, thus creating a tighter, smaller trading
market with potentially high volatility.

Even so, consider the investment growth volume of Bitcoin on a year-to-year basis:

Bitcoin User Growth

Year # of users

2010 10,000

2012 100,000

2014 1 million
Year # of users

2016 10 million

(Source)

Given the total number of people using the Internet worldwide stands at 3.5 billion,
and an estimated 20 billion devices will be connected to the Internet by 2020, the
growth potential for digital currencies like Bitcoin is abundant.

Banking Blockades

In late 2010, Visa, MasterCard, Western Union and PayPal ceased processing
donations to WikiLeaks. Bitcoin and other cryptocurrencies have unique value as a
censorship-resistant form of currency.

Fiat Currency Crises

Fiat money is a currency that a government has declared to be legal tender.

Political risk around national currencies is a major driver of the Bitcoin price. This is
because of its hedging qualities, ensuring against price movements in a given fiat
currency, allowing people to quickly move large amounts of value out of a currency.

Nervousness around Brexit in 2016 led to an increase in the price of Bitcoin.

Between May '16 and July '16, the British Pound lost nearly 10% whilst over the
same period the value of Bitcoin increased by over 65%. There were, of course,
other contributing factors to this price rise.

Regulatory Activity

When Chinese authorities declared that they were shutting down one of the largest
exchanges in the country, the price of Bitcoin plummeted by 20%. China is a
significant market for Bitcoin and the international market was spooked by the
prospect that this would dampen demand in China.

Within a few months, the price of Bitcoin had rebounded and gained considerable
ground as the market recognized that the crackdown wasn't as severe as anticipated
and that most Chinese users and traders would use other exchanges.

Governance
Although Bitcoin is decentralized, some decisions about functionality and operations
need to be made. These can have a significant impact on price.

Developers need more than 50% of the global network of miners to agree with
changes, if and when they get the support, they create what is known as a fork.

In its broadest sense, a fork is simply a change in the blockchains protocol that the
software uses to decide whether a transaction is valid or not.

Bitcoin has been “forked” twice to date; Bitcoin Cash and Bitcoin Gold

How High Will The Price of Bitcoin Go?

With Bitcoin trading volumes skyrocketing, some experts say Bitcoin prices still offer
a tremendous upside.

Bitcoin has a number of famous and well-regarded supporters including the likes of:

Sir Richard Branson – put $30m into BitPay

Bill Gates – a keen supporter of the disruptive technology and how it can change the
world long-term

Tim Draper – billionaire venture capitalist bid for and won all 30,000 Bitcoins up for
grabs in an auction run by the U.S. Marshals Service
Tyler and Cameron Winklevoss – the founders of Gemini are believed to be the first
official Bitcoin billionaires

Peter Thiel – co-Founder of Paypal and trader in Bitcoin merchant processor, Bitpay

John McAfee – the founder of the antivirus company that bears his name, believes
Bitcoin has value beyond speculation

Eric Schmidt – executive chairman of Google described Bitcoin as “a remarkable

cryptographic achievement.”

Al Gore – former US Vice President supports the notion that Bitcoin can replace a
Government function

Bitcoin is exciting because it shows how cheap it can be. Bitcoin is better than
currency in that you don’t have to be physically in the same place and, of course, for
large transactions, currency can get pretty inconvenient.

Bill Gates, Founder of Microsoft

It is not a speculative investment even though it is being used as such by other
people. As Bitcoin network grows the value of Bitcoin grows. As people move into
Bitcoin for payments and receipts they stop using US Dollars, Euros and Chinese
Yuan which in the long-term devalues these currencies.

John McAfee, Founder of anti-virus company McAfee Associates

Consider these price estimates from Wall Street experts: Tom Lee, co-founder of
FundStrat Global Advisors estimates that the bitcoin price could reach $25,000 by
2022 and Morgan Creek Hedge Capital Management founder, Mark Yusko, says
there is a 75% chance that Bitcoin prices will reach $500,000 in the next 20 years,
with the possibility of reaching $1 million in price.

Lee says price growth is not only growing due to popular demand, but it’s also
boosted by larger holdings from institutional traders, which are rising significantly.

That being said, MANY are skeptical of Bitcoin even maintaining its current price let
alone reaching the dizzy heights of $500k. Of course, there are experts who sit on
the other side of the fence on Bitcoin and believe we are in the midst of an asset
bubble.

Stephen Roach, one of Wall Street's most revered economists and former Chief
Economist at Morgan Stanley, described Bitcoin as a dangerous bubble that's bound
to burst.
Is Bitcoin a Bubble?

We believe Bitcoin is a promising technological advancement that long term has the
potential to truly disrupt the financial services industry.

That being said, the skyrocketing prices and wild speculation bear all the hallmarks
of an asset bubble.

It could be argued that the current price is not supported by an underlying demand
for Bitcoin itself but rather a result of a finite supply of Bitcoin and traders flocking
to the cryptocurrency in a bid to profit from short-term speculation and/or an
almost blind faith in what the technology could become.

Bitcoin Market Sentiment

We’ve gathered data from 75+ leading exchanges to determine the general feeling
in the Bitcoin market. Its calculation is simple; using data from the exchanges listed
below, we gather buy and sell volumes for a given time period and weight this
against the total transaction volumes.
Buy/Sell Sentiments:

1 Hour

24 Hours

7 Days

30 Days

1 Hour

Created with Highcharts 7.1.11 HourBuyBuySellSellHighcharts.com

24 Hours

Created with Highcharts 7.1.11 DayBuyBuySellSellHighcharts.com

7 Days

Created with Highcharts 7.1.17 DaysBuyBuySellSellHighcharts.com

30 Days

Created with Highcharts 7.1.130 DaysBuyBuySellSellHighcharts.com

List of Bitcoin exchanges

Cryptsy

BTCChina

Bitstamp

BTER

OKCoin

Coinbase

Poloniex

Cexio

BTCE

BitTrex
Kraken

Bitfinex

Yacuna

LocalBitcoins

Yunbi

itBit

HitBTC

btcXchange

BTC38

Coinfloor

Huobi

CCCAGG

LakeBTC

ANXBTC

Bit2C

Coinsetter

CCEX

Coinse

MonetaGo

Gatecoin

Gemini

CCEDK

Cryptopia

Exmo
Yobit

Korbit

BitBay

BTCMarkets

Coincheck

QuadrigaCX

BitSquare

Vaultoro

MercadoBitcoin

Bitso

Unocoin

BTCXIndia

Paymium

TheRockTrading

bitFlyer

Quoine

Luno

EtherDelta

bitFlyerFX

TuxExchange

CryptoX

Liqui

BitMarket

LiveCoin
Coinone

Tidex

Bleutrade

EthexIndia

Bithumb

CHBTC

ViaBTC

Jubi

Zaif

Novaexchange

WavesDEX

Binance

Lykke

Remitano

Coinroom

Abucoins

BXinth

Gateio

HuobiPro

OKEX

Source – CryptoCompare Public API.

Is Bitcoin the New Gold?

Bitcoin could certainly be the new gold.

JP Morgan analyst Nikolaos Panigirtzoglou

You might be wondering why we're covering Bitcoin and other cryptocurrencies
here at Commodity.com – a site all about commodities.

At this point, cryptocurrencies like Bitcoin are more akin to a commodity than a
currency. They are an emerging asset class which can act as a store of value, can be
traded on an exchange and geopolitical issues have an impact on their price. In fact,
the CFTC specifically labeled Bitcoin and Bitcoin Cash as commodities.

It remains to be seen whether Bitcoin can be a reliable vehicle for wealth storage in
the long term. Will it ever displace gold as the primary way to store wealth?
Probably not. But can it become a digital equivalent of gold? Quite possibly.

Should You Invest in Bitcoin?

Like any opportunity, there are pros and cons to Bitcoin – here’s a snapshot of the
key issues on each side of the equation:

4 Reasons to Invest in Bitcoin

Disruptive technology

Rapid growth

Liquidity

Security

Disruptive Technology

Disruptive technology is defined as a way of doing things that overturns the

traditional business practices. For example, electricity becoming the dominant
source of light in homes when previously kerosene lamps were ubiquitous.

Bitcoin has the potential to replace current payment systems. There is no question
that it can make international transactions easier and cheaper than the current
alternatives such as banks or PayPal. Arguably, though, the most exciting thing
about Bitcoin isn't actually Bitcoin, instead, this might be the start of the next big
thing.
Rapid Growth

The Holy Grail for any financial investment is a big potential upside, and Bitcoin has
that in abundance. If you’d purchased a $100 worth of Bitcoin in early 2010, your
investment would be worth $72.9 million in late 2017. Many financial experts call
for continued price growth for Bitcoin going forward.

Increasing Liquidity

Bitcoin is the most liquid of all the cryptocurrencies, with continued growth,
increasing credibility (example: Japan recently began recognizing Bitcoin as legal
tender and Fidelity Investments has listed the digital currency on its web site,
tracking its trading value just like it does the S&P 500.) As Bitcoin trading volume
grows, and as it gains more legitimacy, expect Bitcoin liquidity to expand
exponentially.

Tighter Security

Structurally and technologically, Bitcoin runs on blockchain technology, i.e., a new

and different method of storing data using a distributed (not centralized) financial
ledger system. A big part of that system is that traders largely remain anonymous
and thus are better protected against breaches and hacks. Nobody is saying Bitcoin
is hack-proof, but its accounts are much harder to crack than current, traditionally
centralized investment platforms.
3 Reasons Not to Invest in Bitcoin

When a shock pushes enough people towards the exit at the same time, that is
when people will realize that this is the case, and there are not enough dollars in the
Bitcoin economy to redeem their balances.”…”A loss in confidence in one platform
would lead to loss of confidence in others.[…]And that’s what the beginning of a
liquidity crisis looks like. This one will be glorious.

Preston Byrne, Former COO of Monax and Fellow of Adam Smith Institute

Bitcoin isn’t a physically held asset

Lack of stability

Anonymity an issue

Bitcoin Isn’t a Physically Held Asset

Unlike stocks or bonds, Bitcoin is not “real”. Instead, Bitcoin is a mathematical

algorithm. In that regard, Bitcoin is more ethereal in nature, and its value rests on a
technological platform that relies on mathematics to assess value, and any Bitcoin
trader is going to have to trust that platform.

Lack of Stability

As a digitally constructed investment asset that has no controlling central authority

and no regulatory body overseeing Bitcoin commerce (as, for instance, the U.S.
Securities and Exchange Commission regulates the U.S. stock market), Bitcoin can
and has experienced strong volatility from time to time. Put another way, if Bitcoin
can rise in value by 100% in a given time period, it can fall by that amount, or more,
in another time period. Investors who aren’t comfortable with high volatility risk
should take that equation into consideration before investing in Bitcoin.

Anonymity an Issue

Since Bitcoin largely exists as an anonymously-traded investment, traders won’t

know who they’re transacting with when dealing in the Bitcoin marketplace. And
once a transaction is completed, there is no “undoing” the transaction, and you
can’t contact the contra-trading partner if you suspect any illegal activity.

How to Buy Bitcoin

Some commentators like to compare the cryptocurrency market to the Wild West,
an untamed frontier where anything goes. They’re not too far off.

Your first instinct is probably to use an exchange like Bitfinex. This involves buying
coins with fiat currency and storing them in a virtual wallet. This is the approach
taken by many users but it carries a number of risks.

There are a number of exchanges to choose from and it can be a little overwhelming
to choose the right one. Here are two options we recommend if you are set on
buying bitcoin:

LocalBitcoins

If you want to get Bitcoin quickly and anonymously your best choice is probably
LocalBitcoins. This exchange lets you buy Bitcoin in your local currency and is
available all over the world. Unlike many exchanges, it is possible to transact
without providing your ID. Unfortunately, this leaves you open to scams. Some users
attempt to take advantage of new traders. You should vet every user before you
agree to a trade. If you take steps to protect yourself from scams then LocalBitcoins
is easy to use and their low fee of 1% makes it a good choice to buy Bitcoins.

Coinbase

If you are willing to hand over your ID another choice is Coinbase. They offer an
exchange, a wallet and a user-friendly interface. You can buy Bitcoin using your
credit/debit card or a bank account. The fees are competitive with 3.99% for a
credit/debit card and 1.49% for most kinds of bank transfers. With Coinbase, there is
less risk of being burned by a bad trade. This safety comes in exchange for your
anonymity so coinbase is unsuitable for privacy-concerned traders.

However…

Managing your own Bitcoin can be a challenge. You might fall prey to a phishing
scam and have your coins stolen. You could misplace your access codes and leave
your coins forever trapped in a wallet you cannot access. If you use a wallet on your
smartphone, if your phone were stolen then your Bitcoins could be gone as well.

There are also risks completely outside of your control. You are entirely reliant on
the competence of your exchange and sometimes things can go horribly wrong.
Nothing demonstrates this better than MtGox.
In 2013, MtGox was the largest Bitcoin exchange, controlling 70% of the market.
Everything was going well until March of 2013 when Fincen seized MtGox’s
accounts. This prevented users from withdrawing USD from the exchange. Things
got even worse when the exchange was hacked. The attackers stole around $500
million bitcoins.

Many MtGox users lost everything.

Sadly, modern exchanges don’t seem to have learned from the MtGox disaster.
Bitfinex was hit by a hack in August 2017. The attackers made off with around $72
million of cryptocurrency. The hackers literally emptied wallets at random which
would have meant that some users lost everything. To offset the loss Bitfinex took
the controversial decision to reduce everyone’s account balance by 37%.

Many traders find this level of non-market risk to be unacceptable. The question is,
how do you get Bitcoin if you can’t trust an exchange?

What is the Best Way to Buy Bitcoin?

Our preferred option is to trade Contracts for Difference (CFDs) using a regulated
broker.

A CFD is a contract between you and the broker. Instead of buying Bitcoin directly
you are taking a short or buy position. You will then make or lose money depending
on the direction that the market moves in. This allows you to take advantage of
shifts in the market without actually owning any Bitcoin.

In short, you can profit from Bitcoin without ever actually owning one.
There are a lot of brokers out there and it can be hard to figure out which is the best
to choose. The first rule is to always make sure you go through a regulated broker.
Regulated brokers have to comply with strict standards, designed to protect your
money. You should take into consideration any commissions, overnight fees and any
risk management tools. We would also suggest you take advantage of any demos
before you commit to a platform.

To save you some time, we compared dozens of brokers on 10 key factors such as
reputation, safety, fees and account requirements (see full list). Based on our
extensive research, Plus500 stands out as our choice to trade Bitcoin CFDs. (CFD
Service. 80.6% lose money.)

Plus500

Plus500 is a leading broker for trading Bitcoin CFDs.

Plus500 subsidiaries are individually regulated by the following agencies; Financial

Conduct Authority (FCA), Cyprus Securities Exchange (CySEC), Australian Securities
and Investments Commission (ASIC).

See the table below for exactly which regulator covers you in your country and what
protection is offered.

Additional
Protection
Regulator Countries Covered Protection
Offered
Offered

Financial UK, Ireland and Germany All client Financial Services

Conduct funds are Compensation
Authority held in a Scheme (FSCS)
(FCA) segregated may cover up to
client bank £50,000 if Plus500
account fails.

Cyprus Andorra, Argentina, All client

 Additional
Protection
Regulator Countries Covered Protection
Offered
Offered

Securities Austria, Bahrain, Belgium, funds are

Exchange Bulgaria, Chile, Croatia, held in a
(CySEC) Cyprus, Czech Republic, segregated
Denmark, Estonia, Finland, client bank
France, Gibraltar, Greece, account
Hungary, Iceland, Isle of
Man, Israel, Italy, Kuwait,
Latvia, Liechenstein,
Lithuania, Luxembourg,
Malaysia, Malta, Mexico,
Monaco, The Netherlands,
Norway, Oman, Poland,
Portugal, Qatar, Romania,
Saudi Arabia, Slovakia,
Slovenia, Spain, South
Africa, Sweden,
Switzerland, United Arab
Emirates and Uruguay.

Australian Australia, New Zealand and All client

Securities & South Africa funds are
Investments held in a
Commission segregated
(ASIC) client bank
account

How much does it cost to trade Bitcoin CFDs?

Plus500 is an excellent choice because they don’t charge any commission on trades.
Instead, you are only charged on the spread (spreads are variable). Be aware that
there are also premiums for holding a position overnight and you can be charged an
inactivity fee if you don’t use your account for 3 months.
Plus500 also comes with a toolkit of risk management tools. For example, you have
the option to set a guaranteed “close at loss” or “close at profit” limit. These tools
give you a lot of control over your CFDs and help remove some of the
micromanagement.

One of the most useful features is the trailing stop. This allows you to set a stop
position that grows with the market. If the value of Bitcoin increases then so will the
value of your stop position. This allows you to enjoy an uptick in the market without
manually monitoring and updating your stop position.

Plus500 also comes with other useful features. It is localized in more than 50
countries and 31 different languages. There is also a range of mobile apps and tools
to help you trade when you’re away from your computer.

Overall, Plus500 is an excellent choice for new and seasoned traders alike. It has an
intuitive platform and excellent risk management tools that will help you make
Plus500 Summary

Convenient access to Bitcoin CFD trading.

Easy sign-up, compared to the cumbersome process of enlisting in a Bitcoin trading

exchange.

Guaranteed execution at a fixed price, without having to wait for another Bitcoin
trader to agree to a buy or a sell transaction.

Allowance for credit or debit cards, a service generally not allowed on

cryptocurrency trading exchanges.

Allowance to trade 10 or more cryptocurrency CFDs, including Bitcoin, Ethereum,

and Litecoin.

Free real-time quotes and 24/7 trading availability

Intuitive charting tools

Start Trading Bitcoin CFDs today

CFD Service. 80.6% lose money.

Start Trading with Plus500

Important: CFDs are complex instruments and come with a high risk of losing money
rapidly due to leverage. Between 74-89% of retail trader accounts lose money when
trading CFDs. You should consider whether you understand how CFDs work and
whether you can afford to take the high risk of losing your money.

Can You Trade Bitcoin Futures?

In December 2017, the CME group, one of the largest financial exchange
organizations in the world, allowed traders to exchange the first Bitcoin futures
contracts. This was considered a significant milestone for the cryptocurrency and
resulted in a spike in Bitcoin’s value.

Bitcoin futures trading works on the same principle as any other form of futures
trading. Rather than directly buying or selling the asset, you are instead trading in a
futures contract. In essence, this means that rather than buying and selling Bitcoin
you are agreeing to purchase an asset at a fixed price at a specified point in the
future.

When the trader purchases their contract they are essentially betting on the future
value of Bitcoin with either a short position (betting that Bitcoin will drop in value)
or a long position (betting that it will increase in value).

A contract is composed of a set number of Bitcoin, in the case of CME, this is five. In
each contract, there is a “tick” or a minimum level of fluctuation in price. If this was
set at $25 then the value of Bitcoin would have to raise or fall by $25 before the
trader would make or lose any money.

Cryptocurrency futures are a fairly new instrument and their viability is somewhat
limited by the volatility that defines the cryptocurrency market.

Are There Bitcoin ETFs?

An exchange-traded fund, or ETF, is an investment fund that trades on stock

exchanges as though they were ordinary stocks. ETFs are a type of fund that holds a
collection of assets and then divide ownership of these assets into shares. An ETF
operates in the same way as a stock so it can be bought and sold easily. Due to their
low barrier to entry, competitive costs and tax efficiency, exchange-traded funds
have proven to be a popular investment choice.
The success of Bitcoin has led to the creation of exchange-traded funds with a focus
on cryptocurrency. These kind of funds are interesting because they allow traders to
benefit from price increases in Bitcoin without having to go through the hassle of
purchasing and managing the coins themselves.

Some ETFs take an approach similar to an Index Fund and attempt to spread out
their choice of assets. Other Exchange traded funds chose to focus on holding a
single asset and peg their value against that. The Bitcoin Investment Fund (GBTC)
takes this approach, focusing its assets purely on Bitcoin. This means it is slightly
easier for traders to track the underlying value of the asset, however, GBTC will be
vulnerable to flash crashes without any hedging assets.

ETFs are an option for traders who are concerned about the complexity involved
with using an exchange and simply want to profit from any price increases from
Bitcoin. They also have a lower barrier to entry than many mutual funds as to invest
you technically need to only buy a single share, rather than meet a minimum
deposit.

That being said, ETFs based on a single asset can be risky because there are no
hedging assets to help protect against sudden drops in value and they tend to run at
a slight premium when compared to holding Bitcoin yourself.

Does a Bitcoin IRA Exist?

Technically, there is no such thing as a Bitcoin IRA. It’s a marketing term, just as
there is no such thing as a “gold IRA” or a “Real Estate IRA”. That being said, it is
possible to use an IRA to invest in cryptocurrencies like Bitcoin.

IRAs come in two different varieties:

IRA – This is a standard IRA. They are generally companies offering a very narrow
field of investment. This could be anything from gold to property or even
cryptocurrency. These IRAs are captive by nature and force their trader to direct
their capital into a narrow range of assets offered by the company itself.

Self-Directed IRA – This is a special class of IRA. It is held with a custodian that allows
traders to direct their capital into any asset class that the law allows. This kind of IRA
is not only capable of holding traditional assets but also a variety of alternative
assets such as gold or even Bitcoin.
The upshot of all this is that a Bitcoin IRA does not differ significantly from a
traditional IRA. You can choose to either do this through a company that focuses
entirely on cryptocurrencies or in a more general self-directed IRA that allows you to
utilize a variety of assets.

BitcoinIRA.com Review

BitcoinIRA has been offering cryptocurrency IRAs since its foundation in 2015. While
it initially only offered Bitcoin as a choice, it now offers a range of alternative
cryptocurrencies. It's grown significantly over the last few years and is now one of
the largest providers of cryptocurrency-focused IRAs. Bitcoin IRA act as an account
designated representative on behalf of the IRA custodian, Kingdom Trust.
Essentially, this means that you will be doing business with Kingdom Trust, not
Bitcoin IRA.

Bitcoin IRA and Kingdom Trust are IRS compliant entities that are able to operate
licensed IRAs. Kingdom Trust specializes in helping traders manage self-directed IRAs
that contain alternative assets. They also help ensure that any self-directed IRA is
IRS compliant.

Initially, Bitcoin IRA only offered Bitcoin as an investment option. In April 2017,
Ethereum was added as a potential asset. As of August 2017, traders are able to
choose from Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic and Ripple. Bitcoin
IRA sources its cryptocurrency through its liquidity partner, Genesis Trading.

When you first sign up you are given the option to build your own portfolio. You can
choose a popular, balanced or custom setup. These aren’t final but they help give
your advisor an idea of what your priorities are.
 <
Select your portfolio with BitcoinIRA.com

This feature is theoretically useful because it enables you to balance your crypto
portfolio by including currencies that won’t necessarily move up or down in tandem.

The mix on offer by Bitcoin IRA includes the “big four” cryptocurrencies as well as
their main alternatives. Sadly, there are some coins we’d like to see that aren’t
currently included, most notably Dash and Monero. That being said, the selection is
likely to expand in the future and should satisfy the majority of traders in its current
form.

On top of offering a number of different cryptocurrencies, the custodian Kingdom

Trust also offers traders the ability to diversify their IRA with other assets, such as
precious metals, without creating a new account.

How does BitcoinIRA.com protect your investment?

The security used by Bitcoin IRA is powered by BitGo. BitGo is one of the leaders in
multi-signature security and has a strong track record of protecting digital assets like
Bitcoin. BitGO specializes in helping businesses facilitate cryptocurrency transactions
and are basically there to help Bitcoin IRA protect your investment.

Bitcoin IRA uses BtiGo’s offline vault which utilizes multi-signature security. This
means that the key or signature is held by three separate parties. One is held by
BitGo itself, the other is held by the Bitcoin IRA custodian, Kingdom Trust, and the
last is held by a backup key provider, keyturn.al. The wallet cannot be opened
without the use of at least two of these signatures.

As an extra layer of security, Bitcoin IRA also implements ID and voice verification.
When you perform live trades the service will require you to confirm your ID. This is
designed to make it almost impossible to fraudulently withdraw cryptocurrency.

Your investment is also protected by Bitcoin IRA’s $1 million consumer protection

insurance, provided by Lloyds of London. This is designed to protect consumers from
any internal fraud or theft. This covers up to $250,000 per account.

Ultimately, though, all the security in the world won't help you if the digital
currencies you are holding become worthless so please remember that you could
lose all the capital you invest. We strongly recommend you take professional
financial advice before considering a Bitcoin IRA.
 What's Driving The Cost Of Your Morning Coffee? Read Our Guide To Coffee
Trading

How is Coffee Produced, Who's Producing It & What Drives the Price of
Coffee?
Contents [hide]
 Why is Coffee Valuable?
 How is Coffee Produced?
 Top 10 Coffee Producing Countries
 What Drives the Price of Coffee?
 Further Reading
Why is Coffee Valuable?

Coffee is a soft commodity derived from a plant that grows mostly in subtropical and
tropical climates.

The beverage produced from the cherries on these plants is a primary source of
caffeine in diets in both emerging and developed countries.

Coffee is such an important dietary staple across the world that it has spawned a
staggeringly large economy of its own. Coffee roasters, packers, growers, marketers
and coffee equipment manufacturers depend on the commodity as do dairy producers
and restaurant operators. Coffee commodity prices, therefore, play a vital role in the
global economy.

Ready to start trading coffee? Read our guide here.

How is Coffee Produced?

Coffee plants grow in two varieties – Arabica and Robusta. The cherry that grows
on the plant contains seeds – known as beans – that are roasted to make coffee.

Arabica plants grow in subtropical and tropical climates in both lower and higher
altitudes:

Lower Altitude Crops: These crops require well-defined rainy and dry seasons and
altitudes of between 1,800 and 3,600 feet. Such conditions produce distinct growing
and maturation seasons. Mexico, Jamaica, some areas of Brazil and Zimbabwe are
countries with these types of conditions.

Higher Altitude Crops: These crops grow near the equator at altitudes of 3,600 to
6,300 feet. Coffee plants here require frequent rainfall and produce two harvesting
seasons. Kenya, Colombia and Ethiopia are countries with these climate and
geographical conditions.

Robusta plants generally grow at much lower altitudes than Arabica crops. Coffee
producers plant Robusta in regions 10 degrees north or south of the equator at
altitudes ranging from sea level to 3,000 feet. Robusta plants can tolerate warmer
weather than Arabica plants.

Global production of coffee is measured in jute bags which can hold 60 kg of coffee.
*One-ton polypropylene super-sacks have been replacing jute bags for coffee
exports.
Variety of Coffee Jute Bags – Image via Pixabay
Total global production of coffee by exporting countries exceeds 150 million jute
bags annually. Arabica beans generally comprise more than 60% of the total
production.
Over 50 countries produce coffee, but the overwhelming majority of the crop grows
in ten countries:

Top 10 Coffee Producing Countries

Rank Flag Country Metric Tons per Year

#1 Brazil 2,595,000

#2 Vietnam 1,650,000

#3 Colombia 810,000

#4 Indonesia 660,000

#5 Ethiopia 384,000
 Rank Flag Country Metric Tons per Year

#6 Honduras 348,000

#7 India 348,000

#8 Uganda 288,000

#9 Mexico 234,000

#10 Guatemala 204,000

The largest importers of coffee include the European Union, the United States,
Japan and Russia. Exporting countries consume about one-third of the more than
150 million jute bags consumed annually. Brazil is the largest consumer among the
exporting countries.
 In the United States alone the economic impact of coffee exceeds $225 billion and
accounts for more than 1.6% of the country’s GDP. The coffee industry produces an
estimated 1.7 million US jobs.

Coffee drinkers enjoy many benefits. The caffeine in the beverage is credited with
relieving fatigue and increasing mental alertness. In addition, the medical community
recognizes other benefits from coffee consumption:

1. Research suggests drinking more than three cups of coffee daily may reduce colorectal
cancers
2. Coffee consumption can alleviate dizziness caused by low blood pressure
3. Coffee consumption can delay or prevent the onset of Parkinson’s disease
4. Research shows consuming more than 400 mg of caffeine daily can prevent gallstones
5. Coffee consumption significantly reduces the risk of developing type 2 diabetes

What Drives the Price of Coffee?

1. Geopolitics
2. Climate
3. Discretionary Income
4. Transportation and Oil Prices
5. Health Issues

Read our guide on how to trade coffee.

Geopolitics

The top five coffee-producing countries account for about two-thirds of global
production, and the two largest producers – Brazil and Vietnam – often account for
about half of annual production.

All of these countries have histories of political instability. Political crises such as
leadership vacuums or corruption scandals can unnerve markets and create concerns
about supply disruptions.

Climate

Coffee crops are highly sensitive to weather conditions.

Crops need the right combination of rainfall and sunshine to yield maximum output.
When these conditions don’t materialize, supply becomes restrained and prices rise.

The fact that the bulk of coffee production is concentrated in a few countries
exacerbates this problem. Global warming patterns have the potential to create long-
term drought conditions in coffee-growing countries. If these patterns persist, coffee
prices could head higher in the years ahead.

Discretionary Income

Although much of the world regularly consumes coffee, the beverage is not a
necessary staple in the same way that grains such as wheat and rice are. Therefore,
patterns in discretionary income and spending can play a significant role in moving
prices.

In developed regions such as the EU and the United States, trends in unemployment
and average hourly earnings could serve as important barometers for changes in
coffee consumption. In emerging markets, overall economic growth could impact
coffee consumption. China, for example, has shown a pattern of shifting toward
Western dietary norms as its economy has matured. Although China has more tea
than coffee drinkers, coffee may rival tea in the years ahead.
Transportation and Oil Prices

Coffee growers have to transport their beans to consumers and businesses around the
world, and all forms of transportation require fuel. The price of oil can have a
major impact on the price of coffee.

Disruptions to refinery operations can cause the price of gasoline to rise. Buyers of
coffee should expect prices for the commodity to have a positive relationship with
energy prices.

Health Issues

The medical community has produced conflicting evidence about the health effects of
drinking coffee. Coffee enthusiasts note the beverage’s benefits for disease
prevention and its numerous antioxidants including vitamins B2 (riboflavin), B5
(pantothenic acid) and B1 (thiamin).

However, caffeine in coffee can lead to anxiety and disrupt sleep in some people. It
also is an addictive substance. The extent to which the public embraces the positive
or negative message about coffee could impact demand and prices for the
commodity.

The US Dollar

Commodities, including coffee, are priced in US dollars. Sellers of coffee receive

fewer dollars for their product when the US currency is strong and more dollars when
the currency is weak. A strong US dollar can potentially depress coffee prices,
while a weak US dollar is usually good for prices.
 The Commodity.com Guide to Copper

Where Does Copper Come From & Why Is Copper Such a Valuable
Commodity?
Contents
 What Is Copper?
 Where Does Copper Come From?
 Top 10 Copper Producing Countries
 What's the Price of Copper?
 What Drives the Price of Copper?
 Further Reading
What Is Copper?

Copper is one of the most widely used metals found on planet Earth. The shiny,
reddish-orange element is believed to be the first metal used by humans thousands of
years ago. In modern society, copper plays a vital role in everyday life. Its physical
properties, which are similar to gold and silver, make it perfectly suited for a range of
industrial uses including electric wiring, plumbing, roofing and industrial machinery.

Copper is soft, pliable and malleable, and it conducts heat and electricity very well.
However, unlike gold and silver, copper is not widely viewed as a currency.
Therefore, copper costs far less than precious metals.

The global supply of copper comes principally from underground mines and from
recycling copper products.
Want to know more about trading copper? Read our guide.

Where Does Copper Come From?

Underground Mines

Miners extract copper from ore deposits found in underground or open pit mines.
Successful copper mining requires concentrated ore, which can be ground into fine
material. The copper is then separated from waste materials and is then refined
further through the smelting process.

<iframe WIDTH="600" HEIGHT="150" SCROLLING="NO"

src="//www.dianomi.com/smartads.epl?id=4315" style="width: 100%; height:
150px; border: none; overflow: hidden;"></iframe>
Although copper has been used by humans for many centuries, more than 95% of all
the copper ever mined and smelted has been extracted after 1900.

Annual copper mining typically exceeds 19 million tons. South America has the most
copper mines, and China is the source of the greatest production of refined copper.
Copper is mined in countries all over the world, with the following countries
accounting for the most of the mining:

Top 10 Copper Producing Countries

 Copper Produced (Thousand
Rank Flag Country
Tons)

#1 Chile 5,500

#2 Peru 2,300

#3 China 1,740

#4 United States 1,410

#5 Australia 970
 Copper Produced (Thousand
Rank Flag Country
Tons)

#6 Democratic Republic of 910

Congo

#7 Zambia 740

#8 Canada 720

#9 Russia 710

#10 Mexico 620

Recycling

Converting old scrap metal into refined copper accounts for almost 10% of the annual
global copper supply and more than 30% of US annual supply. Fabricating operations
 including brass mills, copper smelters, refiners and ingot makers all serve as sources
for recycled copper.

Demand for copper has steadily grown over the years as the global economy has
expanded. Developing nations have increased their demand for copper as their
infrastructure needs have expanded.

The main consumers of copper are China, Russia, the European Union, the United
States and Japan. China, Russia and Eastern Europe have experienced the largest
increases in copper demand and are likely to be big determinants of copper demand
in the future.

The vast majority of copper demand derives from the following industries:

1. Building Construction – These applications include electrical wiring, plumbing and

weatherproofing of homes and commercial buildings.
2. Transportation Equipment – Copper’s excellent conductivity makes it an important
component in electric motors.
3. Electric and Electronic Products – Integrated circuits and printed circuit boards use
copper because of its excellent electrical conductivity properties. Copper is also found
in electromagnets, vacuum tubes, cathode ray tubes and magnetrons in microwave
ovens
4. Consumer and General Products – Copper has strong anti-microbial properties and
the US Environmental Protection Agency has approved the registration of certain
copper alloys for anti-microbial materials including cookware, bed rails, handrails and
doorknobs. Copper is also used in many musical instruments.
5. Industrial Machinery and Equipment – Copper is used in stills for producing whisky
and in glassmaking, engraving and printing equipment.

What's the Price of Copper?

Trade copper today with our guide.

What Drives the Price of Copper?

Copper has many uses in a diverse array of industries. Therefore, its price is a good
barometer for the overall strength of the global economy. The following four areas
represent the biggest determinants of copper prices:
1. Emerging Markets
2. US Housing Market
3. Supply Disruptions
4. Substitution

Emerging Markets

Because infrastructure represents such an important part of demand, emerging

markets are a key driver of copper prices. Fast-growing countries such as India and
China are accumulating vast amounts of wealth as their economies grow. As a result,
they have a growing need for housing and transportation infrastructure and other
types of construction.

Not surprisingly, Asia comprises an increasing share of global copper demand. The
price of copper may depend greatly on the ability of these countries, as well as other
emerging economies like Brazil, to continue to grow. A growth slowdown in
emerging economies will almost certainly have a negative effect on copper prices.

US Housing Market

The US homebuilding industry uses copper in electrical wiring, roofing, plumbing

fixtures and insulation among other things. Therefore, factors that affect US housing
demand, including nonfarm payrolls, mortgage rates, US gross domestic product
(GDP) and demographics, play an important role in determining copper demand.

The building construction industry comprises almost half of copper use in the United
States. Investors should pay close attention to trends in this market for clues about
future copper prices.

Supply Disruptions

Political, environmental and labor issues can have a big impact on copper prices.
South America produces a significant amount of the overall supply of copper,
particularly in Chile and Peru.

Historically, countries in this region have at times chosen governments that have
nationalized the mining industry, such as in Bolivia in 2007. Such events can disrupt
supplies and lead to higher prices. Events such as miner strikes can also produce
supply disruptions and higher prices.
Finally, events such as earthquakes and landslides can slow down mine output.
Investors in copper should pay attention to geopolitical news and natural disasters
that affect the mining industry.

Substitution

The economic principle of substitution represents a risk of investing in any

commodity, and copper is no exception. As prices climb, buyers will seek cheaper
substitutions, if available. Cheaper metals such as aluminum now substitute for
copper in power cables, electrical equipment and refrigeration equipment. Nickel,
lead and iron also compete with copper as substitutes in some industries.

NICKEL

Should You Invest In Nickel? What The Experts Say

The Ultimate Guide

Sharing is caring!

0shares
Contents [hide]

Why is Nickel Valuable?

How Is Nickel Produced?

Sulfidc and Lateritic Ore

Top 10 Nickel Mining Countries

Which Countries Have the Most Nickel

5 Main Uses of Nickel

What Drives the Price of Nickel?

3 Reasons You Might Invest in Nickel

Should I Invest in Nickel?

Expert Opinions on Nickel

How Can I Invest in Nickel?

Nickel Trading and Investing Methods Compared

Why is Nickel Valuable?

Nickel is a solid, lustrous, silvery-white metallic element that is strong, ductile,

magnetic and resistant to corrosion. It also has a high melting point and catalytic
properties.

These favorable traits make nickel one of the most widely used industrial metals on
earth.

The earliest references to nickel date back to Chinese writings in 1500 BC. However,
it wasn’t until 1751 that Swedish chemist Baron Axel Fredrik Cronstedt formally
isolated and named the element.
 Electron-shell-of-Nickel-element-76Electron
Shell of Nickel via Wikimedia

By the late 1800s, iron and steel manufacturers discovered they could strengthen
traditional steel by creating alloys with nickel.

Discovery of new ore deposits in the early 20th century combined with strong
demand for steel during World War I and World War II ushered in the modern nickel
production industry.

Today mines worldwide extract more than 2.25 million tons of nickel annually.

<iframe WIDTH="600" HEIGHT="150" SCROLLING="NO"

src="//www.dianomi.com/smartads.epl?id=4315" style="width: 100%; height:
150px; border: none; overflow: hidden;"></iframe>

In addition, recycling efforts account for additional supplies of the metal.

Over 300,000 products in the consumer, industrial, military, transport, aerospace,

marine and architectural sectors use nickel. As a result, nickel has become an
essential commodity in world markets.

How Is Nickel Produced?

The supply of nickel derives from two sources: primary production (mining) and
secondary production (recycling).
Nickel-Rim-South-mine-via-Wikimedia-1024xNickel Rim South Mine via Wikimedia

Mining provides most of the supply, although the United States Geological Survey
(USGS) estimates the quantity recovered from recycling in the United States
represented 43% of total consumption.

Primary Production

Nickel derives primarily from two types of ores, sulfidic and lateritic. Each type has
specific characteristics related to how it is mined:

Sulfidc and Lateritic Ore

Sulfidic Lateritic

Ore Bodies Pentlandite, pyrrhotite, and Limonite and garnierite

millerite

Characteristics Usually found with copper- Ores contain iron

bearing ores
 Sulfidic Lateritic

Nickel Content About 1% About 4%

Geographical Mostly in the Canadian Shield Tropical regions such as

Location and Siberia New Caledonia

Deposit Location Deposits are generally found Deposits are generally

deep underground. found in varying depths
just below the surface.

Mining Method Miners sink vertical shafts into Large equipment excavates
the ground and drive horizontal the earth and removes the
tunnels into the ore. ore bodies.

Cost of Mining Labor-intensive and expensive to Less expensive since

extract mining occurs at the
surface.

Processing the ores and separating nickel from them also varies depending on the
ore type.

Although sulfidic ores are more expensive to mine, separating the nickel from these
ores is cheaper than extracting nickel from lateritic deposits. Additionally, sulfidic
ores generally contain other valuable minerals that can be extracted during nickel
production.
Nickel Extraction Diagram via Wikimedia

Sulfidic Ore Processing

Separating nickel from sulfidic ores takes place using froth flotation tanks and
magnetic processes. These produce two products – nickel matte and nickel oxide.
These intermediate products contain between 40 and 70% nickel, but each requires
further refining.
Further processing of nickel matte occurs using the Sherritt-Gordon process. With
this technique, hydrogen sulfide is added to the molten material to remove copper.
This leaves a concentrate of only cobalt and nickel. Solvent are then used to extract
cobalt. This leaves a final product with a nickel concentration of more than 99%.

Further processing of nickel oxide occurs using the Mond process. With this
technique, nickel reacts with carbon monoxide at temperatures of between 100 and
175 degrees Fahrenheit to produce nickel carbonyl.

At this point, chemists obtain purer nickel from the nickel carbonyl through one of
two processes:

Nickel carbonyl passes through high-temperature chambers that decompose it into

pure nickel.

Nickel carbonyl passes through smaller chambers that circulate the material at
temperatures of about 450 degrees Fahrenheit. This creates a fine, pure nickel
powder.

Lateritic Ore Processing

The high iron content of lateritic ores makes smelting the preferred method of
nickel extraction. Lateritic ores have high moisture content that requires drying the
ores in kiln furnaces.

These kiln furnaces produce nickel oxide from the lateritic ores. At this stage,
electric furnaces heat the nickel oxide at temperatures between 2,480 and 2,930
degrees Fahrenheit and produce Class 1 nickel metal and nickel sulfate.

com/wp-content/uploads/2018/01/Flash-Smelting-Nickel.png 1280w" sizes="(max-

width: 1024px) 100vw, 1024px"></picture>Flash Smelting Nickel Furnace Illustration
via Wikipedia

The natural iron content of lateritic ores usually creates a final product after
smelting that is ferro-nickel (a combination of iron and nickel). Steel producers can
remove impurities such as silicon, carbon and phosphorous from this combination
and produce strong steel alloys.

Secondary Production
Very little nickel is recycled to its original elemental state. Instead, scrap products
are often recycled into economically valuable materials containing nickel.

For example, it is generally not economically feasible to extract the nickel from scrap
stainless steel products. However, recycling these products allows manufacturers to
create new stainless steel products that contain nickel.

The Philippines is the largest nickel mining country in the world. However, no single
country dominates in production of the metal. Mining takes place in a variety of
geographies and countries:

Top 10 Nickel Mining Countries

Rank Flag Country Thousands of Metric Tons

#1 Philippines 500,000

#2 Russia 256,000
Rank Flag Country Thousands of Metric Tons

#3 Canada 255,000

#4 Australia 206,000

#5 New Caledonia 205,000

#6 Indonesia 168,500

#7 Brazil 142,000

#8 China 90,000
Rank Flag Country Thousands of Metric Tons

#9 Guatemala 58,600

#10 Cuba 56,000

These are the reserves of each country as reported by the USGS:

Which Countries Have the Most Nickel

Rank Flag Country Thousands of Metric Tons

#1 Australia 19,000

#2 Brazil 10,000

#3 Russia 7,600
Rank Flag Country Thousands of Metric Tons

#4 New Caledonia 6,700

#5 Cuba 5,500

Nickel is strong, ductile, magnetic, corrosion- resistant and heat-resistant. As a result

of these favorable properties, nickel has become one of the most widely used
metals in the world.

5 Main Uses of Nickel

Uses Description

Stainless Steel Nearly two-thirds of all nickel produced goes into stainless steel.
A particular variety of stainless steel that contains significant
quantities of nickel is austenitic steel. Many common products
often contain austenitic steel:

- Automotive trim
- Cookware
- Cutlery
- Food and beverage equipment
- Industrial equipment
- Mining, chemical, cryogenic, and pharmaceutical equipment
- Storage vessels and pipes for corrosive liquids
- Sinks
- Tanks
Uses Description

Electronics Iron and nickel alloys are used in many electronics.

Plating Electro nickel plating uses electrical current to cover conductive

metals with a coating of nickel.

Catalysts Nickel is an important ingredient in many catalysts that facilitate

chemical reactions.

Rechargeable Nickel is a key component in rechargeable battery systems used

Batteries in electronics, power tools, transportation and emergency power
supply.

What Drives the Price of Nickel?

The price of nickel is driven mostly by these five factors:

Chinese Demand

Global Stocks

Global Demand Outlook

Government Policies

Input Prices

Chinese Demand

China accounts for more than half of the annual global demand for nickel. Only 10
years ago, Chinese nickel consumption represented less than 20% of global demand.
Rapid economic development in China over the past decade has certainly accounted
for the increased consumption. However, China’s GDP growth has slowed
considerably in recent years, creating doubts about future demand for all industrial
metals including nickel.

Ultimately, nickel prices depend heavily on Chinese demand for everything from
stainless steel products to batteries. If industrialization and urbanization in China
renews its high growth trajectory, then price of nickel should rise. Traders should
pay close attention to Chinese economic data for clues about nickel prices.

Global Stocks

The London Metals Exchange (LME) keeps track of global stock levels for nickel and
other industrial metals. Traders follow these inventory levels closely for clues about
supply shortages or surpluses.

If inventory levels drop, the market may be facing a shortage of nickel supply in the
near future. This could lead to higher prices for the metal. Similarly, if stockpiling
occurs and inventory levels expand, then the market might face an oversupply of the
metal, which can lead to lower prices.

Nickel traders keep close tabs on Chinese inventories, in particular, since they have
the largest impact on nickel prices. Data on shipping containers entering Chinese
ports can provide valuable clues about demand for nickel and other commodities.

Global Demand Outlook

Overall economic activity, particularly in the industrial sector, affects demand for
nickel.

The use of nickel in stainless steel alloys for building projects is a market segment
that deserves close attention. Stainless steel nickel alloys are used to produce
durable structures and protect against corrosion. The Great Bridge of China is one
example of a construction project that used nickel.

>Hangzhou Bay Bridge – China via Wikimedia

The United States has not invested in major infrastructure projects in decades. If the
government earmarks funding for new infrastructure projects, the price of nickel
could move significantly higher. Similarly, as other developed economies replace
their infrastructure, nickel prices could rise.
Government Policies

There are numerous examples of government policies affecting nickel prices:

Historically, Indonesia has been a leading exporter of nickel. However, the country
has also banned laterite ore exports in recent years. The rationale for this policy was
a desire by the government to support the domestic smelting industry. Ultimately,
budget deficits in Indonesia led to a resumption of exports.

The Philippines, the world’s largest nickel miner, has recently threatened to end all
mining in the country.

Actions by these and other governments can have a dramatic effect on nickel
supplies and prices.

Input Prices

Nickel occurs in ore bodies, and breaking down these ore bodies to extract nickel
expends energy. Producing nickel requires ample supplies of coal, electricity and
crude oil.

Mines and blast furnaces utilize energy to extract nickel ores from the ground and
process it into nickel. These costs can have a big effect on primary production.
Similarly, the costs of scrap metal can impact the price of secondary production.

3 Reasons You Might Invest in Nickel

Investors should consider buying nickel for the following reasons:

Bet on Stainless Steel Demand

Inflation and Weak US Dollar Hedge

Portfolio Diversification

Bet on Stainless Steel Demand

Expanding global demand for stainless steel products could contribute to a rise in
nickel prices.

China: The country continues to urbanize and industrialize its economy. Industrial
and mining equipment, tanks, buildings and bridges are just a few of the
applications where nickel could be used.
The United States: The United States is expected to embark on major infrastructure
projects over the next several years. Bridges, railways, airports and other projects
require major upgrades. All of these projects will require significant engineering
resources, and nickel should play a role in building many of these projects.

Inflation and Weak US Dollar Hedge

Investing in nickel is a way to bet on a weak US dollar and higher inflation.

Nickel is priced in US dollars, so the performance of the American economy can

impact its price. The US Federal Reserve Bank has kept interest rates low and the US
dollar weak for many years.

US central bankers are likely to continue these policies to support consumer

borrowing and spending. These conditions are likely to be very beneficial for all
commodity prices including nickel.

A weak dollar could stoke inflation concerns.

There is a limited supply of nickel, and producing it is an energy-intensive endeavor.

The price of the commodity would likely benefit from fears of inflation.

Portfolio Diversification

Most traders have the vast majority of their assets in stocks and bonds.
Commodities such as nickel provide traders with a way to diversify and reduce the
overall risk of their portfolios.

Should I Invest in Nickel?

Traders who want to invest in nickel should consider purchasing the commodity
along with a basket of other commodities that includes other base metals (i.e.,
copper, lead and zinc), precious metals, agricultural commodities (i.e., dairy, meats
and grains) and energy.

Purchasing a basket of commodities helps protect traders from the volatility of any
individual commodity. It also adds overall diversification to a stock and bond
portfolio.

There are two specific trends that could raise nickel prices in the years ahead:

Chinese Demand
China is the top consumer of nickel and could increase its consumption in the years
ahead. The Chinese economy has experienced a slowdown in recent years, although
there are signs this may be coming to an end. Essentially, investing in nickel is a bet
on a resurging Chinese economy.

Infrastructure Demand

Construction and infrastructure could represent a very large percentage of future

nickel demand. The United States is planning large-scale infrastructure projects to
replace dilapidated bridges, airports and transportation systems. Most of these
projects will require large quantities of metals including nickel.

However, traders should also consider the risks of investing in nickel:

A global recession could weaken Chinese demand and put infrastructure plans on
hold. Overproduction of the metal or increased stockpiling by China could create a
supply overhang on the market and send prices lower.

Global economic or political turmoil could strengthen the US dollar and weaken
demand for commodities.

Expert Opinions on Nickel

Many analysts have a dour view of the nickel market. They cite overproduction from
major producers Indonesia and the Philippines as reasons for their pessimism.
“Miners have been holding on as long as they can. They will be close to running out
of wiggle room in terms of cutting costs. We need to see some reasonably sized
refined capacity cutbacks to restore prices and confidence back to the market.”

Mark Pervan, consultancy AME Group, Sydney

Other experts agree that the current economic fundamentals of the nickel industry
are unsustainable.

Consultant Wood McKenzie notes that half of global nickel miners now operate at a
loss, while Citi recently informed its clients that it sees little chance for a rally in
prices in the short, intermediate or long run.

How Can I Invest in Nickel?

Investors have several options for gaining exposure to nickel prices:

Nickel Trading and Investing Methods Compared

Comple
Metho xity Stora Securi Regulat
Expirati
d of Rating ge ty Managem Leverag ed
on
Investi (1 = Costs Costs ent Costs? e? Exchan
Dates?
ng easy, ? ? ge?
5=hard)

Nickel 1 Y Y N N N N
Bullion

Nickel 5 N N Y N Y Y
Future
s

Nickel 5 N N Y N Y Y
Option
s
 Comple
Metho xity Stora Securi Regulat
Expirati
d of Rating ge ty Managem Leverag ed
on
Investi (1 = Costs Costs ent Costs? e? Exchan
Dates?
ng easy, ? ? ge?
5=hard)

Nickel 2 N N N Y N Y
ETFs

Nickel 2 N N N N Y Y
Shares

Nickel 3 N N N N Y Y
CFDs

Nickel bullion

Physical nickel bullion such as bars or coins is the most direct way to invest in nickel.
However, investing in bullion requires a secure storage facility. Ultimately, the cost
of this storage and the low value-to-weight ratio could make holding physical nickel
an impractical proposition. Interestingly, the American nickel coin contains only 25%
nickel and 75% copper.

Nickel Futures

The LME trades a contract on nickel that is a minimum of 99.80% pure. Each
contract represents 6 metric tons of nickel and is quoted in dollars.

Futures are a derivative instrument through which traders make leveraged bets on
commodity prices. If prices decline, traders must deposit additional margin in order
to maintain their positions. At expiration, the contracts are physically settled by
delivery of the metal.

Investing in futures requires a high level of sophistication since factors such as

storage costs and interest rates affect pricing.

Nickel Options on Futures

The LME offers an American style options contract on Nickel Futures.

Options are also a derivative instrument that employs leverage to invest in

commodities. As with futures, options have an expiration date. However, options
also have a strike price, which is the price above which the option finishes in the
money.

Options buyers pay a price known as a premium to purchase contracts. An options

bet succeeds only if the price of nickel futures rises above the strike price by an
amount greater than the premium paid for the contract. Therefore, options traders
must be right about the size and timing of the move in nickel futures to profit from
their trades.

Nickel ETFs

These financial instruments trade as shares on exchanges in the same way that
stocks do. There are currently two exchange-traded funds (ETFs) that invest in nickel
futures:

iPath Dow Jones-UBS Nickel ETN iPath Pure Beta Nickel ETN

Shares of Nickel Companies

There are many publicly traded companies that have some exposure to nickel prices.
While investing in companies can be a leveraged way to gain exposure to nickel
prices, many of these companies have significant exposure to other metals and
commodities prices.

In addition, factors such as company management and the overall stock market can
also affect these investments:

Number
Current Found of Interestin
Company Overview Listings
Price ed Employe g Fact
es

Glencore GLEN.L Internatio London 1974 154,832 The

> GBp312 nal (LSE) Qatar
 Number
Current Found of Interestin
Company Overview Listings
Price ed Employe g Fact
es

.55 commodit Hong Investme

y trading Kong nt
and (SEHK) Authority
mining Johannesb is its
company urg (JSE) biggest
sharehol
der.

Pure Engages Vancouver 1987 Informat Pure

Nickel in the (VSE) ion not Nickel Inc
acquisitio available received
n, a court
exploratio approved
n and royalty
developm payment,
ent of for
mineral previousl
propertie y earned
s in royalties
Canada. from the
Milford
Copper
Property,
of US
$387,810
.

BHP BBL Anglo- London 1885 60,000+ The

Billiton USD47. Australian (LSE) World's
 Number
Current Found of Interestin
Company Overview Listings
Price ed Employe g Fact
es

32 multinati New York Second

onal (NYSE) Largest
mining, Johannesb Mining
metals urg (JSE) Company
and Sydney
natural (ASX)
gas
company.

CFDs

One way to invest in nickel is through the use of a contract for difference (CFD)
derivative instrument. CFDs allow traders to speculate on the price of nickel. The
value of a CFD is the difference between the price of nickel at the time of purchase
and its current price.

Some regulated brokers worldwide offer CFDs on nickel. Customers deposit funds
with the broker, which serve as margin. The advantage of CFDs is that traders can
have exposure to nickel prices without having to purchase shares, ETFs, futures or
options.

Start trading today at Plus500.com.

One of the leading CFD brokers for trading metal commodity CFDs is Plus 500. Here's
why:

No commission on trades (other charges may apply)

Free demo account

Easy to use (mobile-friendly) platform

Industry-leading risk management tools

Trade hundreds of CFDs

Your funds are safe – publicly listed company regulated by the UK's Financial
Conduct Authority and Cyprus' Securities and Exchange Commission

Start Trading at Plus500.com

CFD Service. 80.6% lose money.

Important: CFDs are complex instruments and come with a high risk of losing money
rapidly due to leverage. Between 74-89% of retail trader accounts lose money when
trading CFDs. You should consider whether you understand how CFDs work and
whether you can afford to take the high risk of losing your money.
 Learn How To Trade Zinc

How Is Zinc Produced, Why Is It Valuable & What Drives the Price of Zinc?
Contents
 Why is Zinc Valuable?
 How is Zinc Produced?
 Top 10 Zinc Mining Countries
 Which Countries Have The Most Zinc?
 5 Main Uses of Zinc
 What Drives the Price of Zinc?
 Further Reading
Why is Zinc Valuable?

Zinc is a bluish-white element that can be refined into a metal. It resists corrosion
and, therefore, is often used to galvanize iron and steel.

Zinc is used to produce brass, which is a zinc alloy that contains between 55 and 95%
copper.

Andreas Sigismund Marggaf via Wikimedia

Zinc was formally discovered as an element by Andreas Sigismund Marggraf, a
German chemist who isolated it in 1746.

However, long before this discovery, civilizations were using zinc. According to the
journal Ancient Asia, miners were smelting zinc in India by the ninth century BC.

During the Roman Empire, soldiers forged brass weapons from copper and zinc, and
evidence from a smelting facility shows large-scale production of the metal took
place in India between 1,100 and 1,500 AD.

Today mines worldwide extract more than 11.9 million metric tons of zinc
annually. Zinc mines exist in more than 50 countries around the world, and the metal
plays a key role in the steel industry.
<iframe WIDTH="600" HEIGHT="150" SCROLLING="NO"
src="//www.dianomi.com/smartads.epl?id=4315" style="width: 100%; height:
150px; border: none; overflow: hidden;"></iframe>
Ready to start trading zinc? Read our guide.

How is Zinc Produced?

The supply of zinc derives from two sources: primary production (mining) and
secondary production (recycling). Mining provides most of the supply, although the
United States Geological Survey (USGS) estimates the quantity recovered from
recycling in the United States represented about 25% of total consumption.

Primary Production

More than 80% of zinc mining takes place in underground mines. Surface mining in
open pits accounts for about 8% of mining, while mines that use both methods
comprise the remaining 12%.

Several ores contain zinc including zinc sulfide (sphalerite), zinc carbonate
(smithsonite), zinc silicate (calamine) and manganese and iron compounds known as
franklinite.
 Sphalerite Specimen via Wikimedia
Zinc and lead ores usually occur together, and they often contain other valuable
metals such as gold, silver and copper.

The process of primary production involves four steps:

1. Ore concentration
2. Smelting
3. Refining
4. Alloying

Ore Concentration

A series of steps called froth flotation breaks down the ores into particles with greater
concentrations of zinc. First, the ore is ground into a fine powder and placed in
flotation tanks with water, pine oil and chemicals

The tanks agitate the mixture and zinc particles float to the top, while clay and other
silicates sink to the bottom.
The zinc particles are coated with chemicals to protect them from water. When air is
injected into the tanks, the zinc particles adhere to the bubbles that form and remain
at the top of the tank, while the remaining impurities float to the bottom. Scrapers
then remove the bubbly mixture of concentrated zinc.

Filters remove the water and oils from the tank and leave behind a paste-like mixture.
This mixture is combined with lime – the product made from heating limestone – and
roasted in furnaces at temperatures of 2,500 degrees Fahrenheit. This produces a solid
mass of zinc oxide.

Smelting

During the second step, high-powered furnaces break down zinc oxide into elemental
zinc.Vertical Retort Process for Zinc Smelting via Mliu92 on Wikipedia

The furnaces use electricity, natural gas or coal to reach temperatures of 2,200
degrees Fahrenheit. A series of chemical reactions produces zinc and carbon dioxide.
The carbon dioxide bonds with the zinc to re-form zinc oxide.

To keep the zinc separate, molten lead is introduced into the chamber. The zinc then
dissolves into a molten state and gets carried to another chamber to cool.

Refining

The zinc molten, which is cooled to 824 degrees Fahrenheit, can be further purified
by cooling it in the chamber for several hours. During this refining stage, iron and
other impurities sink to the bottom, while pure zinc remains at the top.

Alloying

Most zinc is alloyed with other metals. To make alloys, refiners re-melt zinc and
combine it in exact proportions depending on the application.

Secondary Production
Recycling zinc is an economically viable activity. In the United States, about 35,000
tons of zinc is recycled annually. Recycling materials include residue from the
process of galvanizing zinc with steel and zinc oxide recovered from blast furnaces.

China is the leading zinc mining country in the world. It produces almost 40% of
the annual supply of the metal.

Top 10 Zinc Mining Countries

Mine Production (Thousands of Metric

Rank Flag Country
Tons)

#1 China 4,500
 Mine Production (Thousands of Metric
Rank Flag Country
Tons)

#2 Peru 1,300

#3 Australia 850

#4 United 780
States

#5 Mexico 710

#6 India 650
 Mine Production (Thousands of Metric
Rank Flag Country
Tons)

#7 Bolivia 460

#8 Kazakhstan 340

#9 Canada 310

#10 Sweden 250

These are the reserves of each country as reported by the USGS:

Which Countries Have The Most Zinc?

Rank Flag Country Thousands of Metric Tons

 Rank Flag Country Thousands of Metric Tons

#1 Australia 63,000

#2 China 40,000

#3 Peru 25,000

#4 Mexico 17,000

#5 United States 11,000

About one-third of zinc produced goes to galvanize other metals such as steel and
iron. However, zinc has many other important applications.
5 Main Uses of Zinc

Uses Description

Galvanizi Galvanization of steel and iron prevents corrosion and rusting.

ng Electroplating is the most common method for galvanizing steel. Items
Material including car bodies, street lamp posts, safety barriers and suspension
bridges use galvanized steel.

Alloys Zinc combines with other metals to form strong alloys. Brass, nickel
silver and aluminum solder are examples of zinc alloys. Musical
instruments and hardware items use brass in construction, while
electrical items and pipes use solder.

Die- Die-casting is the production of metal parts using molds. The

Castings automobile, electrical and hardware industries all use zinc for die-
casting parts.

Zinc Manufacturers of many products use zinc oxide in

Oxide production:PaintRubberCosmeticsPharmaceuticalsPlasticsInksSoapsBat
teriesTextilesElectrical equipment

Zinc Zinc sulfide is an important component in many products:Luminous

Sulfide paintsFluorescent lightsX-ray screens
 Uses Description

Zinc is also an essential nutrient for living things. A typical human body contains
about 2.5 grams of zinc and consumes 15 milligrams per day. Foods with high zinc
content include herring, beef, lamb, cheese and sunflower seeds.

What Drives the Price of Zinc?

The price of zinc is driven mostly by these five factors:

1. Chinese Demand
2. Chinese Supply
3. Global Stocks
4. US Demand
5. Input Prices

Start trading zinc today with our guide.

Chinese Demand

As with most industrial commodities, China plays a pivotal role in determining zinc
prices.

China is the top consumer of refined zinc used in galvanized steel.

Lupu Bridge Shanghai via Jurgenlison on Wikimedia
Therefore, a key indicator of zinc demand in China and elsewhere is steel demand.
Decisions about whether to undertake or hold off on infrastructure projects can create
huge fluctuations in steel demand. Ultimately, these decisions can flow through to the
zinc market.

Monetary policy from the People’s Bank of China is one important factor that can
affect both steel and zinc demand. Stimulating measures can stoke demand for
these commodities, while tighter monetary policies can depress demand.

China’s GDP growth has slowed considerably in recent years, creating doubts about
future demand for all industrial metals including zinc. However, there are nascent
signs that the economy may be rebounding.

Ultimately, zinc prices depend heavily on Chinese demand for galvanized steel in
building projects.

Chinese Supply
A key factor impacting zinc output in China is the country’s increasing
environmental awareness. Poor air quality has forced the government to take a harder
look at the mining industry as a contributor to pollution. If China curbs the
production of zinc to deal with this problem, then the country will be more reliant on
imports. This could drive prices higher.

Global Stocks

The London Metals Exchange (LME) keeps track of global stock levels for zinc
and other industrial metals. Traders follow these inventory levels closely for clues
about supply shortages or surpluses.

.png 300w, https://commodity.com/wp-content/uploads/2018/02/LME-Global

If inventory levels drop, the market may be facing a shortage of zinc supply in the
near future. This could lead to higher prices for the metal. Similarly, if stockpiling
occurs and inventory levels expand, then the market might face an oversupply of the
metal, which can lead to lower prices.

One interesting development with base metals such as zinc is the increasing
importance of inventories held at the Shanghai Futures Exchange (SHFE). Traders
should monitor the change in zinc inventories at both exchanges for clues about zinc
supply and prices.
US Demand

Construction and infrastructure represent a very large percentage of galvanized steel

demand.

The United States has not invested in major infrastructure projects in decades. If the
government earmarks funding for new infrastructure projects, the price for steel could
move significantly higher. This would likely create increased demand for zinc and
result in higher prices.

A strong US economy also increases demand for automobiles. Ultimately, the

transportation sector

-Assembly-Line-via-Pexels-1600x900.jpeg 1600w" sizes="(max-width: 4608px)

100vw, 4608px"></picture>Vehicle Assembly Line via Pexels
Input Prices

Zinc occurs in ore bodies, and breaking down these ore bodies to extract the element
expends energy. Mining and refining zinc requires ample supplies of coal, electricity
and crude oil.

These costs can have a big effect on primary production. Similarly, the costs of scrap
metal can impact the price of secondary production.