Precious Metal Derivatives - Botswana

The nominal value in the Precious Metal Derivatives market is projected to reach US$2.15bn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2029) of 4.90% resulting in a projected total amount of US$2.73bn by 2029.
The average price per contract in the Precious Metal Derivatives market amounts to US$0.23 in 2024.
From a global comparison perspective it is shown that the highest nominal value is reached United States (US$11.92tn in 2024).
In the Precious Metal Derivatives market, the number of contracts is expected to amount to 10.49k by 2029.

Definition:

The Precious Metal Derivatives market refers to derivatives of precious metals such as gold or silver. These include financial vehicles such as options and futures. Derivatives allow investors to profit from a commodity’s value development without owning the physical commodity (e.g. instead of owning a unit of gold, an investor could own a derivative of gold). Therefore, physical commodities are out of scope in this analysis.

Structure:

The market contains the following KPIs: annual notional value, the number of traded contracts, the open interest (number of outstanding contracts at the end of a year), the average notional value per contract as well as the price data of popular specific derivatives of this category.

Additional information:

Examples of popular precious metal derivatives are gold, silver, or platinum.

Precious Metal Derivatives, e.g. Gold, Silver, Platinum

Physical precious metal commodities

The Precious Metal Derivatives market in Botswana is experiencing a notable shift in dynamics, reflecting global trends and local economic conditions.

Customer preferences: Investors in Botswana are showing an increasing interest in diversifying their portfolios through alternative investment options such as precious metal derivatives. This shift is driven by a growing awareness of the benefits of hedging against market volatility and inflation.

Trends in the market: One of the prominent trends in the Botswana market is the rising demand for gold and silver derivatives. This trend is influenced by global economic uncertainties and geopolitical tensions, leading investors to seek safe-haven assets. Additionally, the convenience and flexibility offered by derivatives products are attracting a wider range of market participants in Botswana.

Local special circumstances: Botswana's stable political environment and sound regulatory framework are contributing to the growth of the precious metal derivatives market. Investors are drawn to the transparency and security provided by the regulatory authorities, fostering confidence in trading these financial instruments. Moreover, the increasing integration of Botswana into the global financial system is expanding access to a diverse range of derivatives products.

Underlying macroeconomic factors: The economic diversification efforts in Botswana are playing a crucial role in shaping the precious metal derivatives market. As the country looks to reduce its reliance on traditional sectors like mining, the financial markets are gaining prominence. This shift is encouraging investors to explore alternative investment opportunities such as precious metal derivatives, aligning with the broader economic strategy of promoting financial market development.

Data coverage:

Figures are based on commodity derivatives, their notional value, the number of contracts traded, the open interest (outstanding contracts at the end of a year), and the average value of a contract.

Modeling approach / Market size:

Market sizes are determined by a Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use market research & analysis, and data of World Bank, as well as the World Federation of Exchanges. Furthermore, we use relevant key market indicators and data from country-specific associations and national data bureaus such as GDP, wealth per capita, and the online banking penetration rate. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In this market, we use the HOLT-damped Trend method to forecast future development. The main drivers are GDP per capita an the online banking penetration rate.

Additional Notes:

The market is updated twice per year in case market dynamics change.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Precious metals have long been seen as a hedge against inflation and economic uncertainty. When stock markets are volatile or currencies devalue, investors flock to precious metals like gold and silver as a store of value, driving their prices up. Gold, in particular, stands out as the most popular choice for protecting wealth in times of uncertainty, with central banks around the world holding vast reserves to safeguard against currency fluctuations and political upheaval. Also, the demand for gold as an investment outweighs its demand for industrial uses - more so if we also consider owning jewelry as a form of investment. This pattern contrasts sharply to other precious metals. Silver, for instance, has a much stronger industrial demand, due to its use in sectors like electronics, solar panels, and medical equipment. Platinum follows a similar pattern, with industrial demand outpacing investment demand, due to the its many different end uses.