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Introduction
This article is a primer for trading Gold and Silver, covering how to get started, what to look for, and which instruments are suitable for different account sizes. We focus on volatility and trading instruments as key considerations.
The goal is simple: There is significant opportunity in commodities trading, but volatility can be a killer if not respected.
Note: This is not a "bull thesis for Gold" article. Market participants may have varying views. Our perspective: given macroeconomic trends, rising U.S. debt, and elevated equity valuations, USD-denominated commodities like Gold are likely to rise. Traders flock to rising prices, creating further momentum.
Why Trade Commodities Now?
The commodities supercycle is here—a prolonged bull market for commodities expected to last a decade or more. At 28, time is on my side to capitalize on this trend.
I personally trade Gold micro futures via TopStep Prop Trading (no commission earned by me; this article is not an endorsement).
Market Size: Gold and Silver
- Gold Market Capitalization: $27.8 trillion (at $4,000/oz) – roughly equivalent to the US GDP.
- Silver Market Capitalization: $2.27 trillion (at $46.7/oz).
These markets are enormous, providing ample liquidity for traders.
Key Players in Gold and Silver Markets
- Central Banks
- Commodity Traders
- Trading Houses
- Financial Institutions
Top 20 Gold Holders (Q2 2025)
| Rank | Country | Tonnes |
|---|---|---|
| 1 | United States | 8,133.5 |
| 2 | Germany | 3,350.3 |
| 3 | IMF | 2,814.0 |
| 4 | Italy | 2,451.8 |
| 5 | France | 2,437.0 |
| 6 | Russian Federation | 2,326.5 |
| 7 | China, P.R.: Mainland | 2,302.3 |
| 8 | Switzerland | 1,039.9 |
| 9 | India | 880.0 |
| 10 | Japan | 846.0 |
| 11 | Turkey | 639.0 |
| 12 | Netherlands | 612.5 |
| 13 | Poland | 515.3 |
| 14 | ECB | 506.5 |
| 15 | Taiwan, Province of China | 423.9 |
| 16 | Portugal | 382.7 |
| 17 | Uzbekistan | 365.8 |
| 18 | Saudi Arabia | 323.1 |
| 19 | Kazakhstan | 316.5 |
| 20 | United Kingdom | 310.3 |
Aggregate Holdings
| Region | Tonnes |
|---|---|
| World | 36,359.5 |
Global Gold Holdings by Category (2024)
| Category | Tonnes |
|---|---|
| Jewellery | 97,149.4 |
| Private Investment | 48,633.7 |
| Bars & Coins | 45,414.9 |
| Central Banks | 37,754.8 |
| ETFs | 3,218.8 |
| Other | 32,727.5 |
| Total | 216,265.4 |
Note: These are 2024 numbers; the market has evolved into November 2025.
Gold and Silver share similar fundamentals—rising prices, industrial demand, and safe-haven status.
Key Drivers of the Commodities Supercycle
- Macroeconomic Fundamentals
- Global demand from individuals, institutions, and central banks is surging.
- Goldman Sachs predicts Gold could surpass $4,000/oz backed by central bank demand and Fed monetary easing.
| Year | Central Bank Demand (Tonnes) |
|---|---|
| 2020 | 254.9 |
| 2021 | 450.1 |
| 2022 | 1080.0 |
| 2023 | 1050.0 |
| 2024 | 1089.4 |
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Dollar Debasement Argument
- US debt exceeds $38 trillion.
- Fed monetary easing lowers the USD’s store-of-value appeal.
- Hard assets like Gold and Silver become attractive alternatives.
- Track DXY Index for USD strength: Yahoo Finance – DXY
-
The Mother of All Bubbles
- Veteran trader Christian Klien warns: when financial bubbles burst, hard assets like Gold remain the safest refuge.
How to Trade Gold and Silver
-
Gold Stocks & ETFs
- Example: SPDR Gold Shares (GLD) – largest ETF backed by physical gold.
- AUM: >$114 billion.
-
Physical Gold and Silver
- Bars and coins.
- Requires secure storage and verification.
-
Futures Markets
- Gold & Silver micro and standard futures.
- Risk of complete loss if volatility is not managed.
- Consult a financial advisor before trading.
The Most Important Factors Factors for Trading Gold Futures
-
Watchout for Volatility bands Checkout on volatility levels. High volatility means there's a bigger range for price movement. You might get burnt by volatility. Track Gold Volatility with GVZ Index. Volatility gives an average movement from mean prices. With a lower volatylity band, you can expect prices move less. Watchout for volatiltiy levels to go below 20. During the recent ATH gold prices, GVZ readings were at 33, which is definitely not a time to buy, rather sell contracts for premiums. Price fluctuated widely, leading to massive trading losses if risk was not managed properly.
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How big is your allowance for loss? If you're looking to not lose $100 per contract while trading futures, go for Gold Micro Futures. They move the same, however, for a 1 point movement, it's $10 in profit/loss, rather than the $100. For beginners, this is a good range. Take multiple contracts, manage your risks accordingly. Never Forget: We are in a multi-year cycle, and the most important thing is to remain solvent and keep playing the game.
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Follow the smart ones Follow the folks in the game. Get good advice. Remember, a commodity supercycle is our one way to step out of the rat race, once and for all. Follow Christian Klien on X for solid posts.
Final Thoughts
The commodities supercycle is a long-term trend. Focus on:
- Low-volatility entry points
- Risk management with smaller sized contract and entry and exits.
- Monitoring macroeconomic and central bank actions Gold and Silver offer opportunity in a rising USD-denominated commodities market. Trade cautiously, stay informed, and position for a multi-year cycle.
If you’ve read this far, congratulations! Email the Author for further insights.