Makayla Joanne - January 30th, 2022
Is Precious Metal Investing a Good Idea? What You Need to Know
Did you know that more than 10% of people in the United States alone own gold as an investment? This number may not be surprising to you since precious metal investing is one of the most popular types of investing there is. But what makes precious metals so attractive to so many people in the first place?
In this article, you'll learn everything you need to know about investing in different types of precious metals. You'll also learn why investing in any kind of precious metal can be a great idea not only for your finances but for your investment portfolio as well.
First, let's take a look at one of the most popular metal investing choices: gold.
Why You Should Invest in Gold
Gold is not only expensive; it has plenty of industrial uses since it is a great conductor of electricity and does not corrode as many other metals do. Gold is often known as a "safe haven" investment. This is because, compared to other precious metals or other investment options in general, the price of gold does not fluctuate very much.
More than that, in times of economic crisis, people tend to buy up gold in huge quantities. For metal investing, you can choose to buy physical metal or digital metal such as in ETFs. There are pros and cons to both digital and physical investing.
For example, physical gold acts as a hedge against inflation. Digital gold does not have this luxury. For the same reason, digital gold tends to fluctuate more in price than physical gold, although these fluctuations are usually not large.
However, there are some downsides to physical gold. This is because physical gold is an investment that you need to keep for many years before you start to see a significant return on your investment. When investing in digital gold, on the other hand, you can see a faster return, especially if you invest in ETFs that offer dividends.
There is also the issue of liquidity. Digital gold is very liquid and you can exchange it for cash almost any time you want. Physical gold is not quite as liquid, especially if you own bullion bars.
Bullion coins are more liquid than bars because they contain less gold. So, if you need money fast, you will have an easier time exchanging a gold coin for money than a gold bar.
So, how do other precious metals compare to gold?
A handful of 1/10th oz Gold Coins from the United Kingdom's Royal Mint. Photo Credit: Investor Crate Facility West.
Why You Should Invest in Silver
While silver might not be as popular as gold among investors, it is still one of the most sought-after precious metals that people like to buy and sell. It may offer more benefits to beginner investors as well since it is cheaper than gold. For example, if you don't have enough money to start investing in gold, you can always start growing your portfolio with silver.
However, there are a few downsides when it comes to investing in silver rather than gold. While gold is a safe haven investment, silver is not quite as safe. Its price tends to fluctuate more than gold because silver is useful not only as an investment but as a commodity for various industries.
Although, even though silver might not be as safe of an investment as gold, it is still generally safer than other investments. But you should keep in mind that the price of silver especially tends to fluctuate when there are new innovations involving silver such as certain electrical devices.
As with gold, you can invest in silver in physical and non-physical forms. Because silver is not as expensive as gold, it tends to be more liquid. As with gold, you also invest in silver in non-traditional methods such as by collecting silver jewelry.
However, you should know that when you buy gold or silver jewelry, you are most likely not receiving the metal in its pure form. Only with bullion will you always receive pure silver or gold. Investing in bullion or digital precious metals also looks better on your portfolio.
Why You Should Invest in Platinum
Platinum may not be as popular of an investment as silver or gold, but just because it isn't popular doesn't mean it can't make a great investment. The main reason why platinum is not so popular compared to other precious metals is that it is so rare and because of its rarity, it is very expensive.
Platinum tends to be more expensive than gold and less of it is mined out of the ground every year. The majority of platinum is used in various industries such as those that create electrical devices or jewelry. Because the supply and demand of platinum can fluctuate so much, it is not recommended that beginner investors start investing in platinum.
When investing in platinum, you should keep an eye on the political situations of the countries in which this metal is mined, mainly Russia and South Africa.
Because these countries have strict control over the world's supply of platinum, the price of platinum could easily plummet or skyrocket if conditions change in those countries. Putting all these factors together, platinum is one of the most volatile precious metals you can possibly invest in.
Because of this, you could easily lose a lot of money at once. Of course, you could also become very wealthy in a short period of time.
What You Need to Know About Precious Metal Investing
By the end of this article, you should know all about the details of precious metal investing. Gold, silver, and platinum all have their pros and cons. Whether you're a pro or a beginner investor, you can use this information to make better investments in the future.
To learn more, contact us here.
1 oz Platinum Bar from Engelhard. Photo Credit: Investor Crate Facility West.