Is Investing in Precious Metals A Good Idea?

Investing in precious metals has become a type of safe haven for investors that comes to aid in times of market & economic volatility.  

Since time immemorial, gold has been used as a form of currency, jewelry, and also in the industrial field since it is a good conductor of electricity. It is one of the most popular precious metals due to its scarcity and constant value.

investment in precious metals

There are other types of precious metals too, such as silver and platinum but gold tops them both in terms of value and investment. Due to the ongoing pandemic, gold prices have risen steadily and is one of the reasons why many people choose to invest in gold rather than any other metal. It provides them with a safety net, especially during chaotic times. Let’s take a look at the types of precious metals and their characteristics.

Gold

Gold is the most popular type of precious metal, used in the jewelry industry and is known to be a safe investment for investors. The reason for that is due to its maintenance of constant value even during times of extreme economic fluctuations and because of its durability and versatility.

There are certain situations when an investor would want to sell the gold. It could be due to high-interest rates where the demand for gold could decrease especially if the central banks are trying to control inflation and hold off the price of gold.

If you are looking to invest in this precious metal or are looking for more information, visit investingingold.com to make an informed decision.

Silver

Silver is another popular precious metal usually used in electrical appliances, circuitry, and also in jewelry. Demand for this metal is particularly high in those industries however, in times of increasing inflation, its value decreases as the Dollar weakens.

Platinum

Platinum is a type of precious metal that is even rarer than both gold and silver. Therefore, due to its rarity, its values are higher than that of gold.

Platinum is mainly used in the automobile industry as a key component to catalytic converters and now is also being used in jewelry, especially for engagement rings. Its value is higher than that of gold which means during uncertain times it may bring out quite a fortune for the investors.

Trading Precious Metals

Trading precious metals, be it gold, silver or platinum can be the same as trading in a stock or an asset. Some traders have the notion that the barriers of entry in trading precious metals are high but they need not be. You can invest in the metals through brokers without actually having to store or buy huge amounts of metals yourself.

There are two ways you can start trading precious metals. If you are looking for short-term trading, then trading in commodity CFDs (contract for differences) is a good option. Here, you won’t be buying the metal or the asset itself but trading based on the movement of prices between the opening and closing of contracts. The advantage of this is you do not run the risk of getting actual assets delivered.

Another method, though rather conservative, is trading in commodity ETFs (Exchange-Traded Fund). Here, you can invest in a large selection of companies that deals in precious metals. You can also choose to fund in single stock investment in companies of your chosen precious metal.

Another obvious and simple option would be to directly buy precious metals.

The Downside to Investing In Precious Metals

Every investment involves a little risk. The same goes for investing in precious metals, these are extremely volatile investments and the value can fluctuate over a year. Whenever the economy suffers a downfall, gold prices tend to increase and when the economy is stable and strong, its value drops. However, that shouldn’t be the only case to stop you from buying some precious metals and keeping them for the rainy days in the economy.

When to sell Precious metals?

You probably have bought some jewelry ages ago, either in gold or silver, and never gave it a thought that you can make a quick buck from it. How about those broken gold bangles or chains just sitting in your jewelry box? If you are considering selling it, keep your eyes and ears open to know about the price hikes in gold or silver. When you hear something like that, you are bound to get a good bargain from your old jewelry of precious metals.

However, if you don’t want to sell it, you can always get your jewelry fixed and wait for the rainy day in case you’re broke.

These days gold is becoming quite available and due to that, the prices may fall rapidly. That is when you should sell your gold before the value falls.

Summary

All in all, if you had to choose one of the precious metals to invest in, gold would be a good choice. It has a resale value and can act as a safe investment for you in the future. You can use the above-mentioned trading choices or simply buy the gold bars, coins, or jewelry and put it in a safe deposit box only to be used during economic strife.

However, if you decide on trading in the gold or silver market, it is highly recommended that you study the market diligently for a few years, learn the time value for money, and try out with small, short-term investments to gain an idea of how the system works. Once you gain confidence, you can go ahead and invest in the precious metals of your choice. Keep in mind that investments in precious metals are highly volatile but you can balance it out with other stable investments; otherwise, it would be very risky and instead can cost you a fortune.