How often have you thought about building a precious metal portfolio? Investing in gold and silver is not only profitable but enjoyable as well. Because metals generally hold value long-term, there is a strategy in learning how to buy, sell and trade using industry knowledge and trader tools. Money metal investors generally participate in this industry for five reasons:
- A long-term investment based on appreciation values
- As a means to trade
- As a way to diversify assets
- As market speculation
- An IRA investment in precious metals
Why Should Someone Invest in Precious Metals?
The precious metal industry includes materials like gold, silver, palladium and platinum. Among the most widely exchanged, gold has the least probability of economic changes, which is why it is a preferred metal that traders hold on to during recessions. Silver is more industrially used in manufacturing, so its prices are more susceptible to industry standards and fluctuations.
Unlike real estate and the stock market, investments in precious metals tend to grow in value during tumultuous times. If you buy during market certainty, there is a high probability that you will make profits by selling your precious metals when prices soar. During times of political and social unrest, investors tend to rely on precious metals to retain value through any situation. Metals also provide a level of security since they protect owners from other financial losses.
Define Your Precious Metal Investment Criteria
If you lack a clear road map to follow, it is impossible to achieve your investment goals. Do you want to build an investment portfolio? Do you want to make a living in the short-term? Do you plan to save your precious metals for retirement? When you know what you are entering this market for, you have an idea of what you need to invest to make the profit to achieve goals.
Some investors create goals aimed at short-term success or long-term necessities. Short-term investments are less erratic, but the low rate of risk providers much lower returns. In the long-term, you have the opportunity to gain more rewards because the risk is much greater since you will go through periods of ups and downs that enable you to sell when the time is right.
Because of market differentials, you should invest in various precious metals to diversify your portfolio better and protect your investments. When you invest in a variety of metals like gold and silver, you have the capital on hand to make smarter buying and selling decisions.
Is the Price of Junk Silver Profitable?
Silver is a valuable commodity since it is used in both manufacturing and the jewelry industries. With the higher price of gold, it is also an affordable precious metal that many investors feel comfortable with since prices tend to fluctuate. It allows you to buy low and make a profit quickly. Pricing is also driven by a few factors:
- Supply and demand. The demand for silver is constant, but supply is not guaranteed, which affects its value. When production surpasses the cost of mining, it reduces the amount of silver mined. When prices rise, mining production increases and makes this precious metal ripe for investment.
- Scrap silver is a highly profitable way to build your investment portfolio as well as increase the amount of silver commodity you have on hand. Buying and melting down junk silver from Money Metals Exchange is an ideal way to stockpile silver and use it as a long-term investment strategy that will typically grow in worth.
- Economics also play into the cost of silver as people tend to spend more money on manufacturing goods and jewelry. That said, you should also watch the market for downturns as it is an indicator that consumers will also defer purchases. Taking the time to find a reliable precious metal website that watches trends will help you track changes.
- Inflation can affect investment portfolio values greatly. Silver, however, as a precious metal, generally bypasses a drop in value. When you have silver in your portfolio, you also retain your buying power, which is not guaranteed with paper currency.
- The dollar value also affects silver prices. If the dollar is high, the price of silver tends to be lower. As a strategy, a high dollar will create a buyer’s market where you should be able to invest easily enough because of the lower silver prices.
- Gold prices also affect silver rates in that investors find that when gold values rise, silver increases as well. It is highly debatable, so you need to research pricing history.
Along with these silver investment factors, you need to gain knowledge about investment strategies and market speculation. Researching each precious metal also helps you learn more about which metal is better for short and long-term investments. The market changes so rapidly that you need to learn about margins to understand how quickly it can change. You also need to watch industry standards, so you know when productivity shifts market norms.
Most investors watch trends so that they anticipate when changes will occur. Silver investment, however, can be an enjoyable pastime that also serves as a level of protection that grows in value if you are a long-term investor that is not so occupied with wealth or earnings.
Is Gold a Safe Bet?
No precious metal should ever be considered a safe bet. For most investors, averaging the cost of investment helps reduce risk over time. Most investment strategies will tell you to allocate up to 10 percent in investments toward a monthly gold stock. Some bull market managers will tell you to allocate up to 20 percent since gold gives you a level of protection against currency devalue and inflation during market uncertainties. There are three primary ways to invest.
Bullion
Buying gold bars, coins or jewelry is a popular way to invest in gold as it is easy to store in a bank deposit box or your home. You want to buy gold as close to the current price to avoid premium overpricing. The higher the premium you pay, the less profit you will have. Coins generally come with a 1 percent to 4 percent markup, so be careful when buying retail.
You will avoid being ripped off by establishing why you want to invest in gold bullion. If you want to keep gold on hand as a matter of survival, you should invest in smaller coinage, but you also have to pay premium rates to get it. Experts agree that you should never invest more than 10 percent in markup costs when you invest in gold.
Gold Exchange Traded Funds
Gold exchange traded funds (ETFs) are a terrific way to diversify your portfolio without having to take charge of assets. There are physically backed ETFs that track gold trends. Big hitters like George Soros own SPDR Gold Shares. For newbies, an investment in iShares Comex Gold Trust is one of the most affordable ways to get in on ETF, which require only a .25 percent financial investment.
For each share you invest, you typically own only a 10th of a gold ounce. Because investment fees can go as high as a half percent, it can impact gold share values significantly since ETFs often sell gold to pay for ongoing expenses. The amount of allocated and unallocated gold on hand determines the value of shares.
There are higher risks in exchange traded notes (ETNs) which you can provide a financial institute an investment that determines your return on maturity. ETNs are volatile. You can lose your investment as gold ETNs do not have guarantees.
Gold Stocks
Gold mining is very risky as it involves investment in the equity market. You typically will do well if you invest in companies that reserve growth and have high productivity output. You should also take the time to research gold production worldwide to make sure it is not on the downturn. It can be smarter to find companies in the development stage of production and ensure they have a steady stream of cash flow on hand. Keep in mind that your profits depend solely on a company’s costs, which is why it is a volatile market.
How Do I Invest in Precious Metals?
There is any number of ways you can invest in metals. From ETFs and ETNs or junk silver acquisitions, precious metal investors most often purchase coins or bars. You can also check with local money metal exchanges, auctions, internet sales or pawn shops to see if they have gold or silver for sale. You also have opportunities to start a gold IRA, which you should not discount as a retirement strategy that will surely grow as your investment portfolio does.
Most importantly, an investment in precious metals is all about self-preservation against political discourse, inflation or global recession. As long as you have precious metals, you have the power to maintain your lifestyle even when all else fails economically. As history has proven, precious metals will also withstand any volatile market conditions that paper stocks often do not.
