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Buying Precious Metals as an Investment

You might be thinking about investing in precious metals but are unsure about the process. Some investors have various options out there, such as investing in private equity, real estate, notes, art, and cryptocurrency, and you might already be familiar with a few of them.

Aside from necklaces, watches, and coins, many people are not very well-versed with gold as a form of investment. Yet, they served as a form of currency for centuries, and they didn’t lose their value. They are a hedge against inflation, a store of value, and protection during times of economic turmoil.

After all, if the banks are printing more money, they can’t produce more silver and gold in the future. Some believe that when fiat money loses its value, an excellent alternative to cross borders can be in the form of gold and other precious metals.

Other investment metals used by many investors are platinum and palladium. They are valued because of their various industrial applications. Just similar to that of gold or silver, they are offering excellent opportunities for you to invest and diversify your portfolio.

It’s worth noting that gold and silver usually oppose paper assets. When the price of stocks, bonds, mutual funds, and equities are low, the precious metals’ values are generally high. Gold is considered rare, and for centuries, it symbolized the wealth of the rich and royalty. People need to mine them, and the process alone is very time-consuming, labor-intensive, and costly. They come at a cost to the environment, making them even more unique and valuable.

Assessing your Options

When it comes to the form of precious metals that you may want to add to your portfolio, you might want to consider various coins issued by mints and states across the world. Also, there are many places to buy gold and silver online, so you wouldn’t need to look far for them. It’s possible to open a self-directed individual retirement account and put American Gold Eagle coins into it as part of your financial planning. Other currencies should meet the fineness and purity standards that the IRS set before adding them into your account.

Closer Look at the Metals that are Attractive to an Investor

  1. Gold

Gold is one of the rarest and most beautiful precious metals globally. Many experts have estimated that over 165,000 metric tons have already been mined from the beginning of history until 2011, and the mining operations continue even today.

While the gold metals are still being mined nowadays, know that the production is not as fast when comparing the past yields. Of all the gold nuggets being mined today, over 50% is used in jewelry-making, and only 10% is in other industries. Around 40% is used in investments and is held by central banks.

The bars that you may want to invest in today should be accredited by a qualified assayer, refiner, or manufacturer. The national mint should also recognize them to have a fineness of about 99.95% purity to qualify as an investment asset.

  1. Silver

While silver is a rare metal, it’s more plentiful when compared to gold. The estimates that governments and individuals hold were calculated to be 3,732 metric tons stored in bullion of private hands and around 777,274 for the global reserve. Silver is known to be helpful in medical devices, electronics, automobiles, and solar panels. They should have a purity of 99.99% before they are considered to be an investment into your individual retirement account.

  1. Platinum

The platinum metal is a by-product of copper and nickel mining. It’s one of the rarer elements out there, and there are only a very few deposits of platinum around the globe. The metal is very resistant to corrosion, and it’s one of the most sought-after in various industries.

Platinum is an essential component in an array of electrical devices, medical equipment, and catalytic converters. Its pricing rivals that of gold, and it can also be volatile. Historical prices and previous charts have shown that when production at an industrial level ramps up, it will also increase its costs.

The rounds, coins, and bars made up of platinum should have received accreditation from a manufacturer, assayer, or refiner. It’s also required to have a 99.95% purity to qualify as an investment.

  1. Palladium

Palladium is precious because it’s used as an investment asset and has various industrial applications. It should have a purity level of 99.95% to be considered an investment. The metal is also rare, and it rivals the price of gold in some markets. Get more info about a palladium on this site here.

What Affects the Price of the Precious Metals?

Generally, the negativity and uncertainties in the stock market can affect the price of gold and make it go up. If the economy, bonds, stocks, and equities plummet, you can expect the price of gold, silver, platinum, and palladium to go up in price as the demand for them increases. They also tend to fall when the demand for stocks becomes steady, and the market has regained the trust of its investors.

It’s worth noting that this relationship isn’t necessarily set in stone. There are times when the market experiences a slight dip, but no significant changes are happening in the precious metals. Investors mostly use them as a hedge for losses in other areas. Other factors that can affect the prices are the following:

  • Demand for consumption – If more people are buying jewelry, then you can expect that the demand will go up as well as the price
  • Lower Interest Rates – the prices of gold often have a negative correlation to the interest rates present in a country
  • Political turmoil or instability in the area
  • Low Supply – If there’s a need to recycle more gold, the prices usually tend to go up
  • Natural Disasters – Events like typhoons, monsoons, and hurricanes can raise the price. Affected countries tend to invest more in these precious metals, which will help influence the overall global price.

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