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COSMIC: Precious Metals maintain an intrinsic value and should be a part of a major portfolio for the purpose of diversification. Precious metals, especially gold, can be used to hedge against the decline of the dollar, which has sparked an increase in the volume within metals futures and the creation of the mini gold and mini silver products. Metals volume also has increased as a result of Global economic growth, especially, The BRIC Countries: Brazil, Russia, India and China. This economic growth engine has created greater demand for copper, iron, steel and silver.

Gold has been the most sought after metal in the world for hundreds of years. Gold has a unique blend of rarity and is seen as a flight to safety or a hedge against day-to-day uncertainties of paper money. Gold also plays a role in industrial markets, due to its ability to conduct electricity and its non-corrosive properties.

Silver is the most consumed PRECIOUS metal of industrial raw material. Major industrial usages of silver are: photographic, jewelry, and, most of all, electronics. For example, computer screens contain silver. Unlike gold, most silver placed into industrial material is consumed and not always recoverable. This makes the price of the metal highly responsive to supply and demand dynamics.

Copper is the third most used metal in the world and the majority of its usage comes within the construction and industrial machinery industries. Many of the copper mines in the world are government controlled, which makes the supply of the metal susceptible to political environment of these countries, which can lead to a Contango. situation in futures. Contango arises when the futures price is above expected future spot price. Consequently, price must decline to spot price prior to delivery.

We primarily use metal futures as a position trading device, mostly applying a trend following type system that utilizes the Derivative Concepts proprietary technical indicators and combines them with key Fibonacci inflections generated from monthly, weekly, and daily charts. In order to confirm retracement and to determine when to re-enter in the direction of the long-term trend, we rely highly on weekly Commitment of Traders [COT] to reveal preponderance of commercial longs or shorts.

Note: There are two types of metal traded on the exchanges: precious and industrial. Gold, Platinum and Silver are interesting; however, these entities are better suited to swing or core trading while those of us are intrigued with intraday volatility. 

One excellent source for learning an effective method for trading gold is a 2004 DayTradersUSA talk by Tom Loge'

DISCLOSURE: The High Degree of Leverage Often Obtainable in Commodity Trading Can Work against You As well As for You. Use of Leverage Can Lead To Large Losses As Well As Gains.