If you plan to hold value for your treasures or assets, then you may want to consider investing in precious metals. For millennia, many individuals have used precious metals as tools to transfer the value of their treasures, especially with silver and gold. That way, investors can protect their assets against economic crises and inflation. Not only that, precious metals are now more expensive than currencies due to their rarity and usefulness.
What Are Precious Metals?
These groups of metals can control and facilitate their chemical reaction rate. Moreover, they have catalytic properties while being naturally rare. This makes them regarded as highly valuable economically, especially since they don’t oxidate and corrode.
Before fiat currencies, people used precious metals as a mode of payment. But because of their rarity, they’re now used for raw materials in industrial and investment instruments.
Types Of Precious Metals Popular For Investment
Before, precious metals consisted of iridium, platinum, palladium, ruthenium, and rhodium. But now when it comes to investment, here are the most common types of precious metals that may help grow your investment portfolio:
With this kind of precious metal, palladium has more practical uses, especially in the industrial and electronics industries. Moreover, its physical attribute is a silvery and shiny metal that other industries use, such as groundwater treatment, jewelry, chemical applications, medicine, and dentistry. While rare, this precious metal is mined in Canada, South Africa, Russia, and the United States.
Some jewelers use it as a metal alloy that can be stronger than white gold mixed with yellow gold. In fuel cells and solar energy applications, palladium sheets are applied. Since palladium is malleable, a room temperature can harden and strengthen it. That way, metalworkers can create thick or thin sheets of palladium.
Because of its rarity, platinum has a higher price than gold during political stability and routine periods of the market. Its rarity is due to its annual pulling from the ground. Here are other reasons why platinum can be a good investment:
- Its prices can potentially be affected by cartel-like action since Russia and South Africa are the only countries where platinum mines are located.
- Clean air legislation made automakers demand more platinum for installing more catalytic converters. Auto production and sales’ reliance on platinum made its prices soar higher.
- The computer industry, chemical refining, jewelry, and petroleum industry also make up the rest of the demand.
Although silver can fluctuate quickly, there are many reasons why investors still love it. One of which is its valuable role in industrial metal. To elaborate more on its role, here are ways on how the supply and demand can influence silver’s price:
- Its value is seen in the fashion industry, but it also includes microcircuit markets, superconductor applications, and batteries.
- It’s a desired commodity, especially for electrical connections in the market economies of the East. This includes industrial items, medical products, and electrical appliances.
Gold is the most popular precious metal in the investment industry. This is due to its ability to conduct electricity and heat, malleability, and durability. Its applications in various industries are massive, from jewelry to currency, electronics to dentistry, and others.
The market determines the value of gold. This makes it independent from the laws of supply and demand. That’s because the size of hoarded, above-ground gold outweighs the new mine supply. As a result, the price drops when hoarders start selling. On the other hand, gold prices can soar high if a new supply is absorbed, when these hoarders want to buy.
This makes it a good retirement investment, especially if you buy them from reputable online companies. You can check websites like https://www.oxfordgoldgroup.com/ and others to check out what precious metals IRAs (Individual Retirement Accounts) are available for you.
Ways To Invest in Precious Metals
Since precious metals can go high, investors prefer them to hold the value of their assets. That way, inflation may not affect their wealth since they have protected it by investing in precious metals. With such, here are some ways you can also invest in precious metals.
- Coins or Bullions
One of the many ways to hold precious metals, especially silver and gold, is by buying physical bars or coins. This may be a safe way to invest in gold and silver so long as you keep them in a secure place.
While storing them in your home may be your first bet, it’s best to let reputable third-party storage keep your physical precious metals. If you prefer to keep it at home, it’s best to secure your physical gold or silver in a vault or a secured storage room. That way, you can easily access it in times of emergencies.
Remember, storing it offsite with security can come with regular fees. However, since physical gold or silver can go high as years pass by, you’ll be able to compensate for the fees you may spend.
- ETFs and Mutual Funds
Another way is to invest in mutual funds and ETFs (Exchange Traded Funds). With this kind of investment, you can diversify your precious metals investment. You can also have more liquidity and exposure to precious metal’s long-term stability. Some funds track bullion prices using options, futures, or industry trends, while other funds are passively managed.
When you invest in these funds, you won’t have to analyze individual precious metals stocks. What you’ll do instead is to find a reputable fund manager whose goal is to increase your return on investment. However, you may have to pay the management fees and the like. That’s because they’re professional investors, and they analyze for you.
For unallocated precious metals like gold, certificates are available from companies owning gold. You own precious metals, but not in their physical form, hence, the certificate. What makes this a good investment is the elimination of the regular security fees you’ll spend when owning physical precious metals.
These certificates ensure you have precious metals reserves from the issuing company. For instance, if you buy gold certificates, it means you own a quantity of gold in paper form.
However, you have to choose companies with an excellent reputation to ensure you don’t own a worthless certificate. Sometimes certificates go under if the company that issued them goes bankrupt.
Lastly, investing in precious metals stocks can also diversify your investment portfolio. You may want to invest in various types of precious metals stocks to avoid vulnerability with the market’s swings and volatility.
Like buying traditional stocks, you only need to use a stock trading platform to buy shares from precious metals companies. However, these companies are directly related to manufacturing or mining these precious metals, unlike mutual funds or ETFs where a company invests in various individual entities. Here, you’ll need to ensure the company you’re buying shares from also has an excellent reputation to ensure a return on your investments.
What you have to remember in these kinds of stocks, though, is they don’t give a fast return on investment. Instead, they’re suitable for long-term investment as they can be a hedge against inflation.
Benefits Of Investing In Precious Metals
You may be wondering if precious metals can really be a good investment. Besides the many ways you can invest in such, there are also many benefits to investing in precious metals. Here are some of them:
With precious metals, you can quickly turn them into cash, hence, its liquidity. For instance, if you own physical gold bullions, you can easily find a buyer. That way, you can turn them into your currency.
If you own precious metals stocks, you can sell them quickly, just as quickly as you have bought them. Click on the shares you want to sell on the digital platform, and it’ll automatically find a buyer with similar demands.
- Scarcity and Demand
As mentioned, some precious metals can only be mined in specific countries. That makes them rare and scarce. And since they’re mined, the supply may not last forever as mines may become depleted. However, the demand may still increase because of the many applications of precious metals. As a result, their prices can increase.
Another benefit of precious metals investment is its ability to diversify your investment portfolio. Instead of putting your assets in one ‘basket,’ you may want to purchase precious metals.
And as mentioned above, you can further diversify them through the many ways of investing in them. What’s even better is your many choices of precious metals. For example, you may want to buy some gold, silver, palladium, and platinum. By doing so, your portfolio won’t go down if one market fluctuates. The other markets will balance such.
By investing in precious metals, you get to enjoy the aforementioned benefits. You can also maximize your investment by combining two or all of the ways to invest in them. What’s important is to find reputable companies to protect your investments.
Derrick Jones is an investor. He invests in physical silver and gold. He shares his insights and experiences growing his investment portfolio online through guest posting. Derrick spends in spare time playing basketball and mountain climbing.