Precious metals investments are very real investments and that means that there are some aspects to them that investors always have to keep in mind. Most important, there is risk involved. Precious metals investments are made in a market that is known to be volatile, so those individuals who have been led to believe that precious metals investments are some sort of magical investments that will always gain value should divest themselves of that right away. These are real investments that require a real strategy. What attracts people to precious metals investments, in part, is not that they are guaranteed to always go up in value but that, rather, they are very easy to understand and have the potential to do very well in markets where other investments are floundering.
It’s an Alternative
Funds, bonds stocks: these are all types of investments that people are generally familiar with, even if they don’t understand the specifics of these types of investments. Where precious metals investments are concerned, things work a bit differently.
Precious metals are commodities. They are metals that are used in a variety of different capacities, ranging from manufacturing to the world of medicine to some of the most advanced technologies being developed. This means that they are generally in demand, but there are even more factors that one must take into account.
When investing to stabilize a portfolio in a market where currency is losing value or when there is general mistrust of the future, precious metals investments usually mean investing in gold. Gold is well known as a financial metal. It has fewer practical uses than the other precious metals on the market but is so well established as a store of wealth that investors flock to it when they want to make sure their wealth doesn’t diminish over time.
Silver, platinum and palladium are the other three widely traded precious metals. Copper technically fits into the markets, as well, but it isn’t usually considered one of the precious metals by most investors.
Silver is known for being very volatile. It can go up or down in price very quickly and, to some extent, this makes it great for investors who are looking to take a bit of risk and to reap a big reward if they play their cards right.
Platinum is an industrial metal that is also used in jewelry and art. It is the most expensive of the precious metals on the market in most cases, even outpacing gold. This metal is rarer than gold and very hard to produce but also in significant demand. This makes it pricey and, for many investors, very attractive.
Palladium is usually priced between silver and gold and is very similar to platinum in both composition and usage purposes. This is a popular metal for jewelry, too. It is very lightweight, which makes it ideal for such purposes.
Making precious metals investments requires that you have an idea of whether you want to go short- or long-term and how you plan to exit when the prices are favorable.
ETFs and stocks in mining companies are usually preferred by those who want to get in and out of the markets very quickly. These can be traded as quickly as any other stock and you’re not required to actually hold the physical metal, which makes them good for people who just want to invest in the markets.
For long-term investments, physical metal is very popular. Metal in this form is easy to store and easy to sell. No matter which type of investment one chooses, making sure that there is a strategy in place is imperative.