Investors are always interested in improving their results. Many experts agree that it’s important to diversify your investment portfolio. Diversification is a way to improve the outcome by balancing the types of investments to allow for some highs and lows. While some types of investments have gone down, such as real estate, precious metals have generally been increasing in value. By buying precious metals, investors can add some diversity to their portfolios and improve the potential profit. As a casual investor, you may not have considered buying precious metals as a way to improve your portfolio, yet investing in gold, silver, platinum, or palladium, is most likely going to help improve overall performance.
Buying Precious Metals
Precious metals are part of the global commodities market, traded globally. Prices are determined mostly by supply and demand, much as other commodities. Spot price gives investors a snapshot of the current price of precious metals. This alone won’t give you the whole picture. In addition to checking the spot price, you’ll also want to look at the recent price trends for the past 6 – 12 months. This will provide you with a much better idea about where the prices are headed. When buying precious metals, you’ll find that the daily prices may rise and fall slightly; however, in general, the prices are trending upward.
Hedge against Inflation
Because precious metals are valued based on supply and demand, they are not tied directly to the economy as other investments are. Precious metals hold intrinsic value, meaning they will always hold some value. In most cases, investors can be sure that they won’t lose money on their investment. When other types of investments, such as real estate, lose value, precious metals will hold their value and are likely to go up. Right now, prices are at a slight low, making it a good time for buying precious metals. In 2011, prices took a dip. Since then, prices have been increasing again, particularly trending upward this year. The outlook for precious metals prices seems to be quite good.
Types of Precious Metals
When talking about buying precious metals for investment, the most popular include gold, silver, platinum, and palladium. People are probably most familiar with gold and silver. Both gold and silver have been used for centuries as both investment and as currency. Of the precious metals, silver is the least expensive, followed by gold. Both gold and silver are still used today in currency, and are also often used in jewelry and other industries. Platinum is likely the most useful of the precious metals. It is used in catalytic converters and because of it has antibacterial properties; it is the metal of choice for various medical and dental instruments. Palladium is also a useful metal, and is the most expensive. Both palladium and platinum are highly conductive, making them perfect for use in electronics.
Precious Metals as Investments
Precious metals are a great way to diversify an investment portfolio. Those who are just starting out may prefer to purchase silver or gold. These are most often found in coins and bullion bars. Coins are interesting for both collectors and investors and are available in a wide variety of styles. For example, Silver Eagles are some of the most sought after coins on the market. New investors can easily add silver or gold coins to their portfolios while staying within their budget. When including precious metals in an investment portfolio they are certain to help improve the overall value. When looking at the prices of precious metals, they are rising, and are likely to continue over the long-term.