Precious Metals: A Guide for Beginners
So you’ve just found out that investing in precious metals is way better than letting your wealth devalue in a bank account. And you want to start as soon as possible.
While that’s a great idea and all—wait! Jumping into the precious metal investment arena without at least some basic knowledge can come back to haunt you.
Here’s what you’re getting yourself into.
While other precious metals—such as silver—depend largely on supply and demand for value determination, gold doesn’t work that way.
The prices of gold change from day-to-day, and that’s because it’s linked directly with how the market is doing. When the market is crashing, people but a lot of gold. And when things are looking up for the market, people tend to sell their gold.
People usually buy gold as a hedge against inflation or as a cop-out in case a war breaks out, or some other situation of crisis.
This means that it has an inverse relationship with how the market is doing.
Silver can be more volatile price-wise compared to gold. This is because it isn’t just something that’s seen as an investment or for fancy jewelry. It’s also an industrial metal.
Although there definitely is an investment demand that’s linked with silver prices (that is, people still want to horde it as a hedge against inflation and to use silver bullions as survival coins), supply and demand affect its price.
Silver is used in far too many industrial products: although it is no longer used for photography (remember the silver mirror? Yes? OK boomer), it’s still used in several electrical appliances, batteries, conductors, medical instruments, etc.
It is, therefore, always high in demand. It’s both a luxury and a commodity, so to speak.
You probably have an idea that platinum is more expensive than gold. This is simply because in terms of finite rarities (and they’re all finite rarities) platinum is the rarest.
There’s little of it to go around, and the prices are, thus, higher. It’s also sold and bought in the market around the clock.
Platinum, like silver, is an industrial metal. It’s used in computer parts, in refineries and oil rigs, and to cut down on carbon emissions.
It is also used heavily in the automotive industry. The effect of supply and demand is, therefore, high.
If you can’t decide which precious metal to invest in, read up on our resources on precious metals here. You can also talk to us by calling us at 1.800.559.0088 to know more about precious metal investments.