Investing In Precious Metals

Precious metals refer to the rare metallic elements that have high economic value such as silver, gold, ruthenium, osmium, rhodium, palladium, iridium and platinum. People are increasingly turning towards these metals investment due to their high value and demand, high levels of security and low risk factor.

Investing in valuable metals can happen in a number of ways such as investing in jewelery, bullions, tangible coins and bars, shares, certificates, mining stocks, mutual funds and metal futures.

Investment product

The rare metals make for a more preferred investment over several other investment types such as stocks, real estate etc. Wealthy investors who are on the lookout for investment opportunities are now increasingly investing in metals as a way of storing their wealth.

With the downturn in the economic situation the world over, and in this age of uncertainty investing in bonds, securities and stocks are associated with big risks because their prices fluctuate dramatically. Solid gold and silver investments offer stability even in relatively bad economic conditions. It is therefore a wise idea to diversify the investments. Investing in precious metals makes for a good investment decision and helps balance off the risk factors that are associated with other investments.

While investing you must bear in mind that the prices of these rare metals fluctuate too and it will not be right to say that investing in these metals is totally risk free. There is risk involved in almost every kind of investment and it is required that investors take calculated decisions based on the recent trends of the metals industry.

Before planning your investments, ensure that you are well acquainted with the market trends. Reading market reviews will help in making the right personal finance moves, which includes avoiding simple banking mistakes like ending up in chex systems. It is imperative that you keep an eye on the market as you plan your investments. While the risk is always there, you can take steps to minimize the same.

The increasing spot gold price indicates that investing in it will increase even more in the coming years. Of all the metals, investing in gold is the most popular and perhaps the most lucrative as well. People like to invest in bullion coins and the condition and the design of the coin have an impact on its price.

The metals have managed to retain their value even during the recession. The prices of the four major metals silver, platinum, gold and palladium have increased in the past several years as their demand increased. Besides jewelry and coinage, these metals are used in a number of high-end industries as well such as manufacture of computer parts, hybrid cars and a host of other hi-tech products.

Investing in the metals is a good way to spread portfolio risk at times of economic turmoil and when inflation affects currency values. To many investors, buying these metals indicates a safe haven method and a complete protection against inflation.

Investers portfolio chart

The metals come with good liquidity and can be easily bought and sold without much problem. However, palladium and platinum are less liquid than gold and silver. It is quite easy to get in and get out of these types of investments. One more reason to invest is that as consumption is very high, the demand surpasses the supply and the prices go up.

The downward slide of the stock market has made many people wary of investing their money. These days cash is being regarded as unreliable, and it is getting devalued with each passing day. It is therefore encouraged to invest in hard assets such as silver and gold as this is the best possible way to protect one’s savings. Including, but not limited to, a gold ira or 401k.

If you are looking to make your own investments, then buying precious metals offers many exciting opportunities. With so many alternatives in the market, it might not be easy to find the right option to help secure your finances. You might want to do an in-depth study of the market before you plan your investments. While you can go about it on your own, you might also want to consider contacting someone who can help you with your investments with the help of applicable tools and expertise.

For many centuries, these valuable metals have withstood the test of time and have been regarded as the highest store of wealth and the best medium of exchange. Both silver and gold have been consistent over time and have increased in value. Buying these metals now can help reap financial rewards in the long run despite fluctuating stock prices and currency values.

Gold And Silver Price Trends

A Constant Upward Trend

After the 2008 economic crisis, many people found their retirement accounts depleted by as much as 40%. During the interim period, many naysayers that don’t understand markets blasted equities as an investment. Today those investment portfolios have largely regained their previous price levels. Note the careful use of the word price, not value.

During this period of time, the prices of precious metals, such as gold and silver, have seen a dramatic increase in prices. More importantly, their value has also enjoyed a significant increase. It is very important that the individual investor get comfortable with this distinction between prices and value; it is critical to obtaining your future goals by utilizing investment news.

The difference between price and value is not a mere word game. Since the end of WWII, we have lived in a time of increasing prices. The constant upward trend is the result of our economy’s internal inflation. As inflation compounds and/or increases over the years, the value, or purchasing power, of certain investments increases while others decrease. This value is somewhat independent of their rise and fall in prices.

Price and Value of Precious Metals

In very round numbers, you can assume a price of gold in 2000 of $300 and ounce, and of silver of just over $8.00. Those prices today range from between $1,400-$1,500 for gold and from $25 to $28 an ounce for silver. Different analysts use different ways of projecting these increases, but a range of conservative estimates sees the respective prices at $3,000 and $200. Again, understanding the ups-and-downs of markets, there are fluctuations within those ranges.

Throughout history, the metals considered to be of investment value, or precious, have served as excellent stores of value. That statement means that an ounce of gold has intrinsically maintained its purchasing power over the past 3,000 years.

With this kind of increase in price and value, it raises the question of what is driving such an increase in price and value of these metals. In the final analysis, the spot price, or cost of an ounce at any given point in the trading day, is a function of supply and demand. There are major factors that currently influence that supply and demand equation.

Fears of Inflation

A part of the current economic environment is based on solid facts, another part on the fears that those facts create. Economists and businessmen understand that inflation is driven by, among other things, unbridled government and debt. In the past decade, world governments have printed $120 trillion to bring their global debt to over $200 trillion. Of more concern, this trend is not abating, but increasing.

There are volumes of research on this subject. The only real question most have is at what range inflation will run and for how long. This is a major trend pushing the price of metals considered investment quality to remarkable levels.

Use of the Commodity

It is easy to forget that gold and silver are both, in their natural form, first and foremost commodities. With their unique properties, there are a growing number of applications that consume much of the annual production of each, as well as other metals such as platinum.

Almost never used today as money, these metals remain legal currency in many countries. A number of countries mint in total millions of bullion coins annually that are purchased and stored away. This further increases the demand for the metals.

Will the Trend Continue?

While there will surely be fluctuations, even wide ones, the overwhelming consensus is that the prices of these commodities will continue to rise, as will their value. There is an exceptional potential with silver, as its price moves back into the historical gold/silver ratio price range.