A Quick Beginner’s Guide to Investing in Precious Metals

Guide to Investing in Precious Metals

You’re likely aware of precious metals if you know a little about investing and finance. And you’ve probably heard that diversifying your portfolio by spreading your money through a variety of investments reduces risk.

Precious metals are not only a physical asset but also an excellent safe-haven investment that helps you diversify to reduce your risks.

They tend to keep a steady value through hard economic times. Plus, for centuries, the value and scarcity of these metals have been prized as a sign of real wealth. But also as monetary instruments.

So if investing in precious metals is on your agenda, here’s a quick beginner’s guide to get you on your way.

Types of Precious Metals

Precious metals are metallic elements that have developed in the ground over thousands of years. And since they are difficult to come by, they have high values attached to them.

Metals like gold and silver are commonly used in jewelry, but they also have a wide range of industrial applications. Then, of course, you can invest in various precious metals in their pure form.

The market dictates the value of these metals through supply and demand. It’s also good t know that you can refer to the current price of precious metals as their spot value.

There are four types of precious metals that people commonly buy as investments.

These include:

  • Gold –  People use this as a source of currency and to create jewelry because of its toughness and malleability. Others also use it for dentistry and electronics.
  • Platinum – This metal is extracted from the ground in much smaller quantities than gold due to its scarcity. Industry uses platinum for a variety of applications.
  • Silver – Prices of this metal are pretty volatile at times due to its many industrial uses. 
  • Palladium – This is one of the lesser-known precious metals that industry uses to make electronics, among other things. You can also combine it with gold to create white gold for jewelry.

Other less commonly bought precious metals include copper, zirconium, iron, and magnesium.

How to Invest in Precious Metals

Identifying your objectives is the first step in any investment strategy. There are many ways to start buying precious metals, whether you’re looking to invest short-term or long-term.

However, keep in mind that precious metals should only make up a small part of your overall portfolio if you want to diversify well.

So here are four different options for how you can invest precious metals:

  • Physical metals – Precious metal bullion is available in the form of rounds, coins, and bars. They provide you with a physical asset for wealth preservation, but you need to ensure a secure storage system. This type of investment is a good choice for people who want to build up their wealth gradually.
  • Gold and silver stocks – This is a way of investing in silver and gold through mining companies that find these precious metals. So, in reality, it’s an indirect way of investing in gold or silver.
  • Exchange-traded funds (ETF) – If you want to trade your precious metals in liquid form, an ETF is a great way to do it. This is because they are a collection of funds that tracks an index or, in this case, a commodity.
  • Precious Metal IRA – Here is a way to own precious metals as a physical asset, but you don’t need to store them yourself. Instead, your metals are kept safe in a bank vault.

If you want to learn more about investing in precious metals, check out this post.

Investing in Precious Metals Is Simple

As you now know, there are only a few reliable ways of investing in precious metals. So when your investment objectives are clear, all you have to do is choose the most appropriate investment method to suit your needs.

Thanks for reading, and please check out some of our other latest blog posts.


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