A Beginner’s Guide to Investing in Precious Metals

Have you already introduced precious metals to your portfolio? If not, you shouldn’t wait a minute longer. These rare metals are fascinating portfolio diversifiers and hedges against inflation. 

Besides owning them as physical metals, investors can gain access to them through the derivatives market, mutual funds, and mining company stocks. Each of these valuable assets provides unique opportunities and risks. Making a reasonable decision can be a tough task for aspiring investors. 

We hope this beginner’s guide is of assistance to any would-be investor.

Gold

The most investable and well-known precious metal for investors to consider is unquestionably gold. It’s specific for its incredible durability, malleability, and ability to conduct electricity and heat. Although it has a limited number of industrial applications, such as in electronics and dentistry, it’s mainly used in the jewelry-making field and as a currency. 

The opportunities for making a gold investment are numerous. Investors can purchase physical gold in the form of bars, coins, or jewelry. They can invest in gold stocks in mining companies, participate in gold-focused ETFs (exchange-traded funds), etc. Each investment option comes with its advantages and disadvantages. Some of the most important drawbacks to take into consideration involve the cost of storing and insuring physical gold or the potential underperformance of gold stocks and ETFs.

Nevertheless, the list of advantages of becoming a gold investor is a lengthy one. Nowadays, there are precious metal dealers that help individuals to diversify their portfolios. Make sure to read some of Blanchard Gold reviews to learn about the services offered by precious metal dealers. Whenever banks or currencies are considered unstable, gold is perceived as a safe store of value. 

Additionally, when inflation rates are high, the value of gold remains unchanged or becomes even more valuable. The same occurs in times of political and war upheaval. 

Silver

Another popular precious metal worthy of one’s investment is undoubtedly silver, which is perceived both as a store of value and industrial metal. Due to its dual role, the market price fluctuations are much more volatile in comparison with gold. Silver is resistant to oxidation and corrosion while being the best electrical and heat conductor. 

Furthermore, the antimicrobial and non-toxic qualities of silver are what make this metal helpful in medicine. Conversely, its photosensitivity is responsible for its use in film photography. Electronics is the number one use of silver in industry, as its electrical and thermal conductivity cannot be easily replaced by materials of lower cost. 

Another essential use of silver in the industry is in the creation of solar panels. The application of silver paste on photovoltaic cells facilitates the process of capturing and conducting electrical currents. The reflectivity of the white metal is another reason why it’s used in solar energy. The following link, https://www.usatoday.com/story/money/markets/2014/08/29/no-silver-no-solar/14756397/, explains why you can’t have solar without silver.Its luster, malleability, and reflectivity make it suitable for the creation of jewelry and silverware. 

Moreover, its volatility has a huge impact on silver-stock prices. Its high value and rarity are what make this metal a popular store of wealth. Its malleability makes it an excellent choice for minting local currency. Silver has kept to its value as a commodity, which motivates investors to invest in it through financial instruments, such as mutual funds and stocks. 

In a nutshell, the industrial supply and demand for the white metal have very strong influence on its price. Its price is mostly affected by the applications of silver, as it’s not only used as a store of wealth. 

Platinum

Another rare and precious metal that appeals to investors is platinum. It often reaches a higher price compared to gold simply because it’s rarer. Unlike gold, far less platinum is pulled from the ground on an annual basis. There are many other factors that affect the price of platinum. In the same way as silver, platinum is classified as an industrial metal. 

In addition, the greatest demand for platinum originates from automotive catalysts, whose role is crucial in the reduction of emissions from auto exhaust. Another significant portion of platinum demand is jewelry, whereas the rest is used up by the computer industry and petroleum refining catalysts. Considering the incredible reliance of the auto industry on this metal, platinum prices are usually dictated by auto sales.

The auto industry, however, has reduced the level of reliance on platinum, as Japanese and American carmakers have started using palladium, the less expensive variant. It’s paramount for investors to take all these factors into account, as they make platinum the most volatile asset in the family of precious metals. 

Palladium

Even though less known than the above-mentioned precious metals, palladium is the choice of many investors. It’s applied in a wide range of industries, particularly in the field of electronics. Palladium is also of essential importance in medicine, dentistry, jewelry, groundwater treatment, chemical applications, etc. 

The largest quantities of the global supply of palladium come from mines located in Russia, South Africa, Canada, and the USA. Anyhow, Russia is doubtlessly the largest producer of this rare metal. The first time when palladium was incorporated into jewelry was back in 1939. In combination with yellow gold, palladium forms an alloy that’s much stronger compared to white gold. 

In its pure form, palladium is malleable, but it becomes harder and stronger when someone works with it at room temperature. The most significant industrial use of palladium is in catalytic converters, as the metal acquires the role of a catalyst that accelerates chemical reactions. It’s over ten percent harder when compared to platinum, which explains its remarkable durability. 

Similar to platinum, the volatility of palladium is high as well. Therefore, not many investors put the accent on this valuable commodity as they pay attention to the other assets in the precious metals family. 

A final note

Taking a risk is part of the journey of becoming a prosperous investor. 

You should aim for the stars but always be prepared for potential failure!

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