Precious metals are so valuable because of their rarity. Each year, a minimal amount of such metals is produced, and thus, they become so scarce, which is why their value becomes sky-high.
The precious metal valuation in the past was very high because of their usage as currency. But in this modern age, these metals are considered precious as an investment opportunity and various industrial uses. Actually, investing a small amount of your capital in precious metals is a very secure and useful diversification strategy because they correlate with bonds and stocks.
When you set up your mind for investment, the dilemma a beginner metal investor like you will face is deciding which metal you’re going to invest your money in. It’s tough to tell exactly which metal is best as each metal has its own unique investment characteristics and market. It gets more complicated when you see that these precious metals come in several different forms.
Read the rest of the article to determine the paths to invest in and everything one needs to know before buying precious metals.
The primary precious metals that trade on as a form of exchange worldwide are gold, silver, platinum, palladium, and a few others.
Gold has always been cherished and used as a form of value for thousands of decades. It’s a long-standing favorite to the investors of precious metals. Buying gold as an investment is considered a great decision because of its ability to hold the value well, even in economic shutdowns. It can overcome the major recessions valiantly. Gold is further seen as a strong hedge during periods of higher inflation in comparison to cash investment. Though gold is considered an excellent investment, it is not very suitable for new investors.
In terms of popularity and investment prospectus, silver falls just behind gold as a close runner-up. Being an inexpensive metal compared to gold, it enjoys a huge advantage for starting with a small amount of investment. It’s easier to make a portfolio from scratch. Widespread use in the industries, especially in the solar energy sector that is growing very fast, supports the silver’s price.
The lower price of silver compared to most of the precious metals presents a storage challenge despite its advantages. The inventory capacity required for any sum of value in silver will be higher than that required of the other precious metals as an ounce of gold, palladium, or platinum costs many times more than an ounce of silver.
The use of platinum is widely seen in the catalytic converters of vehicles and in jewelry too. Platinum is not used as a major investment metal as sold or silver. But still, it has a good value proposition and can be a good investment.
Historically, platinum price has been way higher than that of gold, but the scenario has changed in recent years as gold outperformed platinum recently. As platinum isn’t a major investment metal, it is not vulnerable as the gold and silver market, which can be subjected to a downward move, and this is the main advantage of riding out financial storms you’re going to enjoy while investing in platinum. Across different markets worldwide and in different market conditions, platinum’s price tends to be more stable.
Palladium is more or less similar to platinum, both in terms of characteristics and market. Though it does not have the jewelry appeal, it is used in automobile manufacturing. Platinum and palladium both follow almost the same track in pricing. Though both are quite similar, palladium is more used by the precious metal investors to put on an additional layer of diversification to enrich their portfolio.
The market of copper is more diverse than any other metals stated above in this article. It has rampant use in the decoration, industrial, and manufacturing sectors. The demand for copper is thus ever-increasing, but like other precious metals mentioned here, it has a limited supply.
In comparison to gold and silver, copper has been overlooked even in the recent past, but the scenario is changing as an increasing number of precious metal investors have started to invest in copper bullion coins and bars for withstanding further currency devaluation and hedging their portfolio.
Is There Any Risk of Investing in Precious Metals?
No investment in any sector is risk-proof. Investment in precious metals is not also an exception; there is a certain amount of risk associated with them. Even gold can be volatile too, which is often defined as recession-proof. Silver and others can fall in this category too.
Keeping all these thoughts in mind, it is suggested to do your own research, identify the risks, and know about them before investing. You also need to consider that few variables for investment into these assets can shift in terms of how risky they are.
Check out whether there are any fees or spreads associated with these assets you are trading. You can set yourself as a potential successor in this field by following these steps and making the right investment.
The Bottom Line
For diversifying your portfolio, investing in precious metals can be a useful and effective method. Knowing your target and risk profile before jumping in is the trick for achieving success with precious metals. To accumulate wealth, the volatility of these precious metals can be harnessed. It also can lead to ruin if left unchecked. It’s better to start your journey with gold or silver. Best of luck!