I used to not understand how it was possible to trade precious metals at all, except as part of a passive securities portfolio as an alternative allocation. But after studying it a bit, it turns out that there is one of the easiest trades in this market.
As we all know, price is determined by the balance of supply and demand. And in the case of precious metals, there is a huge imbalance in demand. This is because of the uneven distribution of holidays throughout the year. On holidays, people give each other gifts and jewelry flies off the shelves of jewelry stores. The jewelry business has a distinct seasonality and must protect the price of its production commodity supply by buying futures for precious metals.
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