Bullion Investing: Frequently Asked Questions—Answered
If you’re thinking about investing in precious metals for the first time, you probably have a lot of questions.
Precious metals such as gold and silver were historically used as currency before legal tenders took their place, leading to the development of paper money.
Gold, silver, and other precious metals are still bought as investments today, since they offer security against inflation and counterparty risk. Precious metals are frequently bought as investments in the form of bullions.
What is a bullion?
In a nutshell, bars, investment coins, or ingots that are made of precious metals such as silver, gold, or platinum are known as bullions. The qualification here is that their purity and weight must be known.
This includes coins such as the immensely popular American Eagle Gold bullion coin or the American Eagle Silver bullion coin, both of which weigh an ounce each. Bullions are easily bought and sold due to their fixed purity and weight, and therefore, are a good investment choice.
What metal bullions should I invest in?
While all high purity precious metal bullions are tangible assets, there are a variety of factors that influence the choice of metal for each investor; these include affordability and long-term investment returns.
Silver is more abundant than gold, and therefore costs a lot less in comparison. As of April 2020, the gold/silver ratio reached around 120, which means that it would take 120 silver bullions to exchange one gold bullion of equal weight. Silver is an immensely affordable precious metal investment, and a good option if gold or silver bullions are out of your price range.
Gold is one of the most consistently bought investments globally, and holds its value in times of crisis. Many American gold investors believe it to be a safeguard against inflation and counterparty risk—and history agrees with them.
While the S&P 500 index went down by 37% during the recession of 2007-2009, gold fluctuated in value but eventually ended up with a 24% price hike over the course of the Great Recession.
How important is diversification?
It’s important to note that the factors driving the prices of precious metals are different for each metal, and therefore, they’re not exactly correlated with each other.
It’s best if you diversify the metals you invest in, thereby protecting yourself against the potential risk of loss while also enjoying the benefits of each.
This also holds true when adding precious metals to your investment portfolio, as gold and silver have a very low correlation with stocks.
We’re a gold and silver investment company that deals in the exchange of precious metals for the financial security of our investors. At Orion Metal Exchange, we offer secure gold and silver storage for all our investors. Contact us today to learn more about our services.