In addition to traditional Forex currency pairs, many Forex and CFD brokers offer the options to trade in Gold and Silver. Access to buying and selling these precious metals as old as human history is in high demand within the trading community for many reasons. Firstly, their volatility is typically much higher than the usual volatility level of major fiat currency pairs – quite often double the size or even more! Secondly, precious metals such as Gold and Silver are practically currencies anyway. Thirdly, trading these metals can allow for some diversification, especially as they are commodities as well as “currencies”.
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Most Forex and CFD brokerages offering trading in Silver denominate it as a CFD contract paired with the U.S. Dollar, but a few brokers offer an expanded range against major currencies such as the Euro or even against Gold. One thing watching out for when you trade Silver is the overnight financing/swap charge which is typically relatively high when compared to the major Forex currency pairs. It is usually considerably higher on the short side than the long side, so if you are planning on making any Silver trades and holding them for more than a couple of days, you should check the rate in force and consider carefully how much of your trading “edge” it might remove.
Spreads are also proportionately higher when you are trading precious metals compared to almost all currency pairs, which is something else worth thinking about. Forex brokers often use the notations XAU/USD for gold contracts and XAG/USD for silver, so don’t be worried if you don’t see the words “gold” or “silver” when you are looking through a broker’s list of what they offer to trade. If you are a U.S. resident, the U.S. government passed a law in 2011 prohibiting you from trading over-the-counter silver or gold instruments, but if you are not, it isn’t hard to find a broker that offers them on the menu.
Still not sure which broker? For a tailored recommendation, you can always use our free tool (takes 15 seconds) that will help you find a suitable Personalised Broker based on your precise requirements here.