If you are thinking of getting into precious metals investment, you’ve come to the right place. This guide give you some important bits of information you need before getting started…
What Precious Metals Can I Invest In?
There are various precious metals which one can invest in. Here are some of them…
There are six PGM (platinum-group metals); palladium is one of these (Read this article for more details). Unlike some of the other metals, investors don’t really spend much time on this one. This doesn’t mean Palladium is useless; this metal is used a lot in industrial products, electronics, jewelry, medicine, groundwater treatment, and dentistry.
This is another PGM metal. Platinum is used mostly for industrial purposes. For instance, platinum is used a bit in the petroleum refining and computer sectors. It is also used a lot by automotive companies to create catalytic converters (these help reduce smoke emission from the vehicles exhaust).
Due to the rarity of this metal, it has a good level of investment value. However, it isn’t on the same level as some of the other metals.
As you may have already guessed, when it comes to precious metals, silver is one of the most common. Similar to platinum, silver is used for industrial purposes. It is used quite a bit in the photography and electronics industries. Due to the electrical properties of silver, it is a crucial component in solar panels.
Aside from electronic usage, silver also has store value. As you already know, silver is used to create bars, coins, silverware, and jewelry.
This metal is definitely the most investable and well known. Gold is famous for its shaping capability, heat conduction, and durability.
Gold is mostly used as a currency form, or to create jewelry. However, it has some uses in the electronics and dentistry industries. To protect themselves against inflation, a lot of investors look for these metals if political or economic turbulence occurs. You can visit Goldmoney to learn how you can purchase gold and other precious metals for investment.
Pros and Cons Of Precious Metal Investment
Investing in precious metals has different benefits. First of all, it provides protection from inflation. Metals such as gold have the tendency to rise above or at the rate of inflation.
In addition to this, metal is a real asset. The value it holds is beyond industrial usage or investment purposes. Metals such as gold are quite easy to liquidate. An investor has the ability to sell his/her assets quickly, then convert to cash. By choosing this investment option, you can also help diversify your portfolio.
Before you rush to any conclusions, you also need to keep some of the disadvantages in mind. For instance, if you purchase physical gold, you shouldn’t expect to generate income. In addition to this, insuring and storing gold will end up costing you some good money.
What Are The Risks Involved?
Aside from the cons, there are also some risks you should keep in mind before getting started. For example, you need to consider price volatility. The price of a metal can be greatly affected by mining supply, changes in Federal Reserve policies and economy, and investor demand.
A rising threat to investing in precious metal is cryptocurrency. When it comes to investment properties, crypto assets are similar to metals like silver and gold. More investors are going for crypto assets. If this trend continues, the price of silver and gold could fall drastically due to the diminishing demand from investors.
Investing In A Precious Metal — Options
There are different paths you can take to invest in these metals. Here are some of them…
A convenient way of metal investment is to buy shares of organizations that engage in the production and mining of these metals. When the metal prices go up, you should expect the stock prices to rise as well. This option may sound appealing, but purchasing equities comes with more risks than just volatile metal prices.
If you purchase stock from a company which mines these metals, you are basically gambling on the producing properties and management of the organization. If there is an issue with either, you should expect to see a drop in stock price. Mining equities have the tendency to outperform or underperform the precious metal’s price action.
Physical Coins and Bars
It is quite easy to purchase physical bars made of precious metals from dealers all around the globe. For gold bars, the ranges from as low as one gram up to 400 ounces.
When it comes to the other metals, you can also get bars in various weights and sizes. For coins, they are minted by the government. When it comes to the size, they generally range from about 1 ounce to 1/10th of an ounce. The price of coins moves along with the price of the metal.
It’s very important to look for reputable organization if you want to purchase physical metal. You can find various banks and dealers advertising the sale of physical metal. You should be able to compare the prices between each dealer.
In order to avoid fraudulent companies, be wary of any dealer offering a metal below market price. Do not work with a dealer if you feel uncomfortable with them.
ETN and EFT Products
These products try to replicate the precious metal’s price action and deal on stock exchanges. To replicate gold’s price action, the choice ETF products are IAU and GLD. To track the price of silver, the most common ETF is SLV. The ETF known as PPLT is for platinum. In addition to this, there are a ton of ETN products available in the precious metal industry.
Dealing with precious metals isn’t a walk in the park; you should expect to do a ton of research and work. However, if you play your cards right, you can expect to make a lot of profit. But, please, don’t enter into this arena without doing your due diligence.