A Beginner’s Guide to Precious Metal Investments
Investing your wealth can be tricky. Every day you stumble across new terms and products. You’re looking to diversify your portfolio, but how do you go about it? There are stocks, bonds, mutual funds, CDs, crypto, etc. Each has its own benefits and levels of risk.
Here’s where you might want to consider precious metal investments. Over the course of this blog, we will tell you all you need to know about precious metal investments as a beginner.
Types of Metals
Quite a few types of precious metals are used as investments. Gold and silver are the most common ones. But we’ve also got platinum and palladium. Some experts argue that even copper and zirconium can be counted as precious metals. But let’s keep our discussion to the common ones only.
Let’s begin with the most popular one of all. Gold has been regarded highly throughout history because of its scarcity, along with its chemical and physical properties. It has some industrial use, but we all know gold to be used in jewelry.
Gold’s prices are influenced mainly by sentiments rather than the supply and demand of the metal. If gold collectors feel the need to sell their assets, the cost of gold reduces, and it appreciates when people start hoarding the metal.
Silver trading works on the same principles as gold; its supply/demand also impacts its price variation. This is why silver’s price is more volatile than that of gold. Silver is not only used as an ornament, but it also has various mechanical and industrial uses. Silver is used in the auto industry, dentistry, a variety of electronics.
Due to its abundance, silver is comparatively cheaper than gold. Hence, if you’re planning on investing in the metal, you would have to purchase a relatively larger quantity.
Like silver, platinum is used in jewelry. Platinum is usually traded at much higher rates than gold or silver. This is because the metal is rare and not easily extracted from the surface of the Earth. Platinum prices fluctuate a lot due to their high demand and limited supply.
Plus, most of the platinum in the world is sourced from Russia and South Africa. So, the political conditions of these two countries have a significant impact on the metal’s supply. During COVID-19, the travel restrictions made it even more challenging to supply platinum to other countries.
Palladium is probably the most uncommon precious metal. It is heavily used in industries and electronic products. Like platinum, it is rare to find. Its atomic composition is such that palladium is more robust than platinum. This makes palladium a more durable alternative.
When mixed with yellow gold, it creates an alloy that is stronger than white gold. This metal was first used in jewelry in the year 1939. And in 1967, the first coins for palladium were issued by the government of Tonga, which are used for investments today.
Why Invest in Precious Metals?
Precious metals are an excellent alternative investment method. They also provide you with direct asset backing.
Gold and silver, and other similar metals serve as suitable long-term investments. This is because these metals are rare to find, have excellent chemical properties, and high industrial usage.
Precious metals don’t only help in earning revenue but also act as a fantastic hedge to your other investments.
Keynesian economics suggests that every economy works in cycles of busts and booms. After every boom, there will be an inevitable bust. And in those “bust” times, all the stocks and bonds would plummet, but your precious metal investments would save the day.
It has been observed that when the stock markets go down, the prices of these precious metals go up. This is because investors look for other outlets to divide their wealth.
How to Invest in Precious Metals
If you’re looking to invest in precious metals, there are a few methods you could try out. There are precious metal IRA, bullion coins, or exchange traded funds (ETFs).
Let’s consider each of these options.
Exchange Traded Funds:
In ETFs, you’re not given custody of the physical metal. One ETF can have different metals, and they are bought and sold at the net price. ETFs are highly liquid, meaning that you can buy and sell them as you please and at any time. But since they don’t provide you with custody, you won’t be able to claim the metal or any coins for that matter.
Precious Metal IRAs
If you’re looking to invest for your retirement, this is the best method for you. A gold IRA or silver IRA provides a diversified investment opportunity to people retiring. This guarantees that their investments are safe with minimal risk. They’re easy to set up and simple to maintain.
Alternatively, you could buy gold coins or other precious metal coins. These provide you with physical custody of the metal. You can now choose to place them wherever you want or do whatever you want to do with them.
These coins are easily transferrable as well, and you don’t have to go through lengthy processes to transfer ownership.
If you’re looking for long-term investments, bullions are your safest bet.
So, if you’re looking to diversify your portfolio, you should go for precious metals. You can purchase bullion coins or go for an IRA based on your requirements and end goals.
We, at Orion Metal Exchange, offer both of these services. We trade in authentic precious metal coins. We also provide the facility of self-directed IRAs. We’re a member of the NRA Business Alliance and have got hundreds of satisfied customers. You, too, can become an American gold investor just give us a call.
We’ve been in the business for more than 50 years, and we provide free precious metal investment advice so that you can make the decision that is in your best interest.