Precious Metal Derivatives - South Africa

The nominal value in the Precious Metal Derivatives market is projected to reach US$48.44bn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2029) of 4.38% resulting in a projected total amount of US$60.02bn by 2029.
The average price per contract in the Precious Metal Derivatives market amounts to US$1.14 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 23.49k 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 South Africa is experiencing a notable shift in customer preferences, trends, and local special circumstances.

Customer preferences: Investors in South Africa are increasingly turning to Precious Metal Derivatives as a way to diversify their portfolios and hedge against market volatility. The allure of potentially high returns coupled with the ability to trade without owning physical assets is driving more interest in these financial instruments.

Trends in the market: One prominent trend in the South African Precious Metal Derivatives market is the growing demand for gold and platinum derivatives. Gold, often seen as a safe haven in times of economic uncertainty, is particularly popular among investors looking to safeguard their wealth. On the other hand, platinum derivatives are gaining traction due to the metal's various industrial applications, especially in the automotive sector.

Local special circumstances: South Africa is a major producer of both gold and platinum, giving local investors a unique advantage when trading Precious Metal Derivatives. The country's close proximity to key mining operations allows for easier access to market information and a deeper understanding of the factors influencing price movements. Additionally, the historical significance of these metals in South Africa's economy adds a cultural element to trading activities.

Underlying macroeconomic factors: The development of the Precious Metal Derivatives market in South Africa is also influenced by broader macroeconomic factors. Economic stability, inflation rates, and currency fluctuations play a significant role in shaping investor sentiment towards these assets. Moreover, government regulations and policies regarding the mining industry can impact the supply and demand dynamics of precious metals, thereby affecting derivative prices.

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.