As a short-term stopgap to help dig the United States out of a disastrous economic situation over the past few years, the federal government has initiated artificially low interest rates and an inflation of the country’s money supply. These measures, it is known, are only temporary and must be counteracted at some point to continue the nation’s economic recovery.
Congress is attempting to come to a decision as to when interest rate and money supply tapering will commence. For the short term, this will mean that interest rates on loans will increase. Getting approval for loans will become more difficult, and some inflation in the prices of goods and services will increase. These are the growing pains associated with getting out of a recession and reestablishing economic growth, but what does it all mean for investors?
Precious metals investments have long since been the go-to investment for diversifying and stabilizing investment portfolios. Financial advisors often recommend that investors put 10-20% of their portfolios into tangible assets, for example, precious metals investments.
Silver Is Up and Coming
While gold has always been the most popular and highest valued of precious metals investments, and it far outweighs silver in value per ounce, don’t ignore silver in the market. Silver has had a volatile year on the market, and it looks to continue to have a bumpy ride until around 2017. However, the entire market is actually looking to be pretty volatile, as well. Gold isn’t really any safer from dips and peaks, and silver is a far less saturated market.
With recent tariffs on gold investment in India, this large emergent economy has seen a major increase in silver consumption. The same increase in both silver and gold demand has been seen in China, as well. Precious metals investments are, overall, on the rise all over the world. Now, while the market is fairly low, is the time to invest in silver before it spikes.
Platinum Has Huge Demand
On the other end of the precious metals investments’ pricing spectrum from silver is platinum. Platinum is actually valued higher than gold because of its limited supply. Whereas gold mining has existed for so long that backup reserves of gold still greatly outweigh new production gold in sales every year, platinum is much more difficult to come by.
Russia and South Africa have a virtual monopoly on the most lucrative of precious metals investments. Not only that, but platinum is valued, not only for its rarity and beauty when used in jewelry, but it’s also used in several industrial applications, such as the manufacture of catalytic converters for automobiles.
The demand for cleaner running cars is not going to decrease any time soon, so platinum has a very stable place in the world’s economy and will prove to be an ideal long-term investment.
How to Get in the Game
So how can you take advantage of precious metals investments? There are a few ways to buy in, actually. You can purchase exchange traded funds (ETFs), mining stocks and mutual funds, futures and options, bullion, or certificates.
When you buy ETFs, you’re essentially buying stock in gold. ETFs are highly liquid and thus very attractive to investors who may need to gain access to their funds quickly. Mining stocks and mutual funds work in a very similar way, by investing in the companies that produce precious metals. Futures and options work in a very similar way, as well. All of these options are highly liquid, but they are all also higher-risk than buying physical precious metals.
For more stable, lower-risk precious metals investments, it’s recommended that you buy bullion, in which you have your precious metals investments physically in hand. You can also buy certificates for these metals, which are just the paper representation of the physical bullion and act much the same way.