Throughout history, civilizations have stored value in precious metals. This almost-universal recognition of value makes gold, silver and other precious metals a great long-term investment. Investing in precious metals provides protection against factors that range from inflation to civil unrest.
Precious metals investing is attractive to investors for a number of reasons. The types of precious metals that are most popular include gold, silver, platinum and palladium. Gold has the benefit of being a durable metal that has, historically, kept its appeal. Investors in the precious metals market go back and forth on silver, alternately valuing it as a store of value and a metal with tangible industrial uses. For this reason, its value is more volatile than gold’s. However, because silver is lower in price, it is easier for the beginning investor to get started.
When investments such as bonds, real estate and the stock market go down, people flock to precious metals because these investments tend to increase in value in times of turmoil.
If you have invested during times of certainty, you can make a profit by selling some of your investment when prices go up.
Political crises and wars also cause investors to seek the stability of gold. Physical metals are particularly attractive in these situations, since they are valuable items that you can keep in your own possession for greater security.
The safest portfolio is one that is well-diversified. By having investments in precious metals, stocks, bonds, and cash, you can garner profits while protecting yourself from losses.
Identify your investment goals.
If you don’t know what goals you are building toward, it is impossible to identify the types of investments that will help you achieve them. Do you want to build wealth? Establish a portfolio that will yield passive earnings? Are you saving funds for events that will happen five years from now, or 30? How much will you need?
Some investment goals are short-term, while others are medium or long-term goals. Short-term investment vehicles should be safer and less volatile so that you will have your funds when you need them. However, this can lead to lower returns.
With a longer investment horizon, you can take more risks in pursuit of higher rewards. The longer span of time means you can ride out downturns.
How you will allocate your assets depends on where your goals fall on the spectrum. Precious metals investing should only be part of your portfolio. You need a mix of investment types to protect yourself from market volatility. Investing in gold and investing in silver can be smart actions for any investor as long as you diversify for a stronger portfolio over all.