Why would you want to get into trading the FX markets when you could just take up some forex trading as a hobby? Although many are skeptical of the credibility of such a method of earning money, the truth is that gold and silver can be both used as currency in the Forex markets. As such, buying and selling these precious metals can be quite profitable if done correctly.
It is important for us to recognize that currency trading is a completely different business than investing in stocks and bonds, and as such, you must treat this practice with a great deal of caution. However, if you play it right, you can make a sizable amount of money in the currency markets.
So how does it work in the Forex market to buy and sell gold and silver? To simplify, the currencies that are traded on the markets of the world are made up of two separate groups – the U.S. Dollar (USD) and the Euro (EUR).
There are many non-Federal Reserve backed currencies out there – these are the unbacked and “fiat currency” currencies, which are essentially an invention of the US government. Here, you have two currencies that are absolutely free floating, and thus, they are more or less “free to produce”.
However, just like any other commodity, they also come with a number of properties that are necessary for people to buy gold and silver and use them as currency. When you buy gold or silver, you are then using it as a base for the production of money.
So, when you buy gold or silver, what you are actually doing is you are purchasing a promise of money. This promises of money was based on the value of gold and silver at the time of its creation. What this means is that gold and silver come into existence as a good business idea.
In the same way, when you buy these two commodities, you are using them as a promise of money. This promise of money is known as the “Fiat Money”. The Fiat Money is supposed to last forever and it is therefore not subject to inflation, bank failures, and trust issues.
So, when you buy these two commodities, you are in effect purchasing a promise of money. Therefore, it is completely self-explanatory.
Thus, when you buy gold and silver, you are using them as a base for the production of money. As such, you can gain from their price rises and you can buy with them at any time at all, and as such, they are perfect currencies to use as a base for your own currency trading.
Furthermore, because you can use it as a base for the production of money, the fiat currency, you can change them into another currency at any time without regard to the cycles in the markets. You can buy gold or silver in USD and then move your own currency out to the value of that amount, and then use the same amount of money to trade to another company.
As such, when you consider that there is a limit to the value of any one of these commodities, you can see how much money you can earn by simply watching how the actual value of each commodity changes. As such, trading gold and silver on the Forex markets is a very profitable practice to get involved in.