You may be reading this because you’re thinking about diversifying your already impressive portfolio into precious metals. If you are going down this route, then you’re very wise because it’s been a good few years since precious metals have held such promise. Lots of gold and silver are being siphoned up by industry and more investors are buying metals as a hedge against adverse economic events. You’ll want a quick primer on what’s out there before you decide to invest with gold bars or platinum bullion, so here it is.
Gold is, well, the golden oldie among precious metals, having been prized for millennia. Its incredible beauty, as well as its resistance to any sort of corrosion, its conductivity and malleability mean that it’s prized for its uses as well as its looks.
Silver is nearly as old (in terms of how long we’ve used it for) as gold and we use it in broadly the same ways – as currency, jewelry and in medicine and industry. It’s the most reflective metal we know of.
This is one of our rarest metals, with a mere 118 tons being taken from the earth each year. It’s very valuable, as you might imagine, and it’s also useful in the automotive industry and in medicine, where it’s an important component in anti-cancer drugs.
We discovered this element only 200 years ago and we don’t tend to use it in jewelry and fewer people invest in it. It’s very popular, however, in the automotive industry, where it’s found a job in catalytic converters and in medicine and electronics.
How to invest in precious metals
Precious metals have lots of uses, not just in jewelry, so they’re traded on the commodities market. All the countries of the world have some need for these metals and their prices are fluctuating constantly.
If you want to buy precious metals you can buy them as a commodities investment in the form of an ETF or you can buy them in their physical form as a bullion bar.
Inflation will make everything more expensive so if you want to buy metals, make your move soon so that you’re insulated from further rises in the prices as well as making a profit.
More about metals pricing
The prices of metals are dictated largely by supply and demand and if you watch an index you’ll see that they change by the second – literally. The price at any given moment is the spot price and this is how much the metal can be bought and sold for at that moment. Investors make their money by buying metal at a lower spot price and selling it for a higher price. Whether that higher price is a few minutes or a year down the line depends on the investor’s individual strategy.
Making a profit
You can, therefore, buy and sell metals several times a day (or even an hour) to make your profits if you’re a day-trader or you can buy metals to hold for several years or even decades in a retirement fund before realising your assets. It’s entirely up to you, but as ever, get the best investment advice you can before making any moves.