Platinum Futures Trading

By the 1840s, Chicago had become a major trade center, connected by rail and telegraph to Eastern cities. As the volume of trade grew and midwest farmers brought their wheat to Chicago to sell, they found themselves at the mercy of dealers who would buy it and ship it all over the US. This worked well for the dealers, but growers were unhappy with the "hit-or-miss" atmosphere. In 1848, a central site was established where farmers and dealers could engage in "spot" trading--exchanging cash for the immediate delivery of wheat.

Soon, growers and dealers began to make arrangements to sell/buy wheat for a fixed price at a specified future date. Thus began futures trading in the US. Futures trading benefitted both sides of the deal. The farmer knew how much he would get for his wheat; the dealer knew his costs in advance. In some cases, the dealer may have given the farmer a small amount of cash as a guarantee. Eventually, these contracts became commonplace, and well accepted. Later, the contracts even began to be sold before the specified date.

Platinum Futures

In order to be traded in the futures market, a cash commodity must be standardized and its price must fluctuate enough to create uncertainty that can result in both risk and profit. Futures are traded on stock exchanges in "pits," designated areas on the floor where futures traders conduct their business. Each pit trades one or more future, and every futures exchange is set up the same way. In order to trade on the floor, you must be a member of the exchange itself. Most investors trade through brokerage firms that hold exchange memberships.

Platinum is the rarest of the precious metals. It is 16 times rarer than gold and 100 times rarer than silver. The world's annual supply of platinum is around 118 tons, which is half of the steel produced by the US every day. Mining platinum is expensive; it takes approximately 10 tons of ore to produce one troy ounce of platinum, yet platinum has far more industrial uses than gold and silver combined. If you are considering getting into platinum futures trading, you will want to study long and short-term trends in platinum prices. Current world events will almost certainly affect trading in precious metals. Getting the best possible advice and having a solid base of knowledge about platinum futures is the key to making wise decisions when it comes to trading in platinum.