Planning to Invest in Precious Metals? Here’s What You Need to Know

Gold

Money is a big deal and people are always looking for new ways to get it. This could be anything from establishing a business in a foreign country to investing in stocks and shares. It may be that you are currently learning about precious metals, and are wondering whether they would be something worth investing in. If that’s the case, read on because this article will explain everything you need to know about them.

What They Are

Precious metals are all around us and they can be found in everyday items like jewelry, coins, and electronics. Some of the most common precious metal investments include silver, gold, platinum, palladium or rhodium. Gold has been used as a form of currency for thousands of years. Silver and platinum are also popular, and Rhodium can be found on most luxury cars. Palladium is often alloyed with platinum or nickel.

If you go online you can find out more on this subject, and much of the information is free. You can learn about American Gold Eagle coins and the Sheldon coin grading scale. It’s possible to view pictures and request free investor kits, and to read articles on things like bitcoin and credit Suisse gold bars.

Decide What You Want Before Investing

Before you invest, you should have a rough idea of what you’re looking to invest in – and what your financial goals are for that type of market. For example – do you want to protect your assets from inflation? If so, maybe consider an investment in gold or silver as they tend to hold their value better than other forms during times of economic instability/inflation.

Alternatively, you could be in the market for a short-term investment. In this case, platinum or palladium might be what you’re looking for.

Why Invest In Precious Metals?

Gold and silver have been used as mediums of exchange for centuries. Precious metals are tangible assets that can be sold easily, unlike stocks or bonds which cannot always be liquidated so quickly in a market downturn. When the price of gold goes up it’s because investors see economic uncertainty ahead, causing them to buy more gold than usual. If things are calmer, it’s good news If you’re thinking of buying physical precious metal bars or coins. This is because it means you’ll usually pay less per ounce when the economy is doing well. Precious metal prices are normally volatile, but less so than the stock market or real estate because they’re not as easily bought and sold. 

There are also more of them available than other assets which makes it difficult to control their price long-term. (That’s unless large amounts of people hoard them all at once -which some do, particularly during recessions).

By investing in precious metals you can:

  • save for the future and store value
  • hedge against inflation, currency devaluation or deflation
  • use portfolio diversification to protect your investments
  • enjoy the fact that gold is not correlated to the stock markets

How Much Can You Invest In?

Gold is not illegal in America or elsewhere for that matter. You can buy as much as your budget allows although there are no guarantees on its future value.

Having said that, there are strategies you can use and in some ways history repeats itself time and again.

Why You Should Diversify Your Investment Portfolio

The most obvious reason is that you reduce the risk of losing money if one particular asset moves in the opposite direction to another. For example, diversifying your investments between stocks and bonds reduces your overall risk. If stock markets crash or interest rates rise, you will have other assets that typically increase in value during this time.

Another great benefit of diversification is increasing your cash flow. This is achieved through tax benefits received from investing certain types of assets inside ISAs (Individual Savings Accounts). You can also use an EIS (Enterprise Investment Scheme) for additional tax relief on qualifying shares held by you as a smaller company.

How You Can Buy Them

You can obtain physical possession through a dealer/brokerage account. A physical holding most commonly takes place in one of three ways:

  • by opening an account with a precious metal brokerage
  • purchasing coins or bullion from authorized purchasers (who store their inventory onsite at banks and other public institutions known as “refiners”)
  • buying shares of publicly traded companies that invest exclusively in gold, silver, etc.

Coins

Gold And Silver Coins

In gold investing, some of the most common investments include gold bullion bars or rounds, gold certificates, gold mining stocks/funds, gold futures contracts and even numismatic (collectible) items such as rare gold coins.

In the past there were gold prospectors panning for gold. While this may have been a way of making money back then, it’s not going to get you rich today! That being said, gold and silver coins can still be a great investment option if done intelligently.

Bullion And Bars

When people are talking about buying gold or silver bars they’re typically thinking of bullion bars rather than collectible coins. Bullions are valued based on their fine weight and purity – how much metal there actually is versus what was originally promised by the company that made them.

It’s valuable to also understand that there can sometimes be differences between different products that all fall under the same category; one might have more nickel included while another has less, etc.

Storage

This is important because it will keep your metals safe. There are different options available, ranging from the well-known safety deposit box at a bank to having storage in an offsite facility that you rent. You could even consider having it kept in a secure safe installed in your home.

It’s well worth doing plenty of research before you proceed. It’s important to fully assess the risks and to know when to sell. Also, check out things like storage fees and taxes. If you invest wisely, precious metals can form part of your armory, helping you to make a stable profit over the coming years.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.