Silver Trading Strategies
As you know I am not generally bullish for long-term commodity investing.
I think that everything that goes up will also go down and so I recommend that people take care when preparing for precious metals investing.
It is necessary to prepare your silver ETF investing or trading strategy accordingly.
The first is to go directly to commodity markets. You can trade silver on the London Metal exchange.
If you have selected a good stock broker you can trade these implement together with other asset classes like stocks or bonds or ETFs on the same account. This is a cash product like currency.
Another option is to use derivatives, which are available for several commodity exchanges. The New York Mercantile Exchange (NYMEX) or NYSE Life are good choices for US markets. There are futures contracts available there.
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Trading Strategies For Silver
If you plan to hold silver for a longer time, then remember that futures must be rolled over, as they expire by a specified date.
These stocks represent another opportunity on how to invest in silver. It is an indirect form as these companies have their own business rules, their own revenues, and expenses.
Their profits could directly relate to the price of silver but it does not rule. Trade should implement a specific stock trading strategy to trade these stocks.
It is always ideal to find the best mining stock at the time. Every investor has his/her own view on why to invest in this metal.
You personally, prefer to be active. It means that I do not buy stocks or ETFs to hold them too long.
Everyone prefers to time my entries and then use main trading trends to generate profits.
You do not have to hesitate to use short selling to profit from declining prices. Generally, my investing and trading strategies for this metal are based on two basics.
The first one is the Global Macro overview of commodities and silver particularly. Next, I monitor the silver ETF stock chart development and act accordingly.
I do not buy when the stock trading trend is down. I prefer to use short selling of the metal exchange-traded fund or buying of inverse ETF.
How To Trade In Silver MCX
In contrast, Gold only has very few industrial uses, with just 17% of its uses relating to the industry.
As such, if the shortage was the only determinant of the price distinctive between Gold and Silver, then the GSR would stand at about 7, or maybe even 22 if obtainable reserves are taken into consideration.
In reality, over the past 8 years, the GSR averaged at 64.7, with a low value of 31.7 in 2014 and a high of 83.3 in 2016, proposes that many other factors play a role in controlling the relative price.
Sceptics would rightly argue that this is obvious given that the higher the price of Gold, the higher the GSR if no change in the price of Silver takes place.
However, what would be useful is to examine whether the previous day’s GSR would have any effect on today’s price. However, to do this, we need to also include a couple of more determinants in our estimation.
While there is no tradeable measure of the world economy, this is usually proxied by US economic performance.
To further accommodate the impact of the US economy on the price of Gold, we also have to accommodate for the US stock market in our estimations.
Naturally, the fact that the data only cover one calendar month, and one which usually has a lower trading volume than usual presents an obvious caveat to the results shown below.
MCX Silver Trading Strategies
One very specific precious metals investment strategy is based on the gold-silver ratio.
The comparison is very easy, as both precious metals are measured in ounces: if the price of Gold is $1200 and the price of Silver is $12, the GSR stands at 100.
This is not the whole story, however. Silver, indifference to Gold, has actually many factories uses, with more than 50% of its requirement in 2017 being hired for industrial purposes.
The regression analysis suggests that the USD index has a strong negative relationship with the price of Gold (at -0.92), emphasizing the inverse relationship between Gold and the US economy.
Most likely because we have already accommodated for US macroeconomic developments via the use of the USD index.
The success of the GSR can, however, depend on the time horizon used. However, the data is not supportive of GSR having an effect on the Gold price.
Traders need to remember that these are just indications and the need for proper risk management strategies always exists.