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The Best Investing in Precious Metals

Jun 30

When it comes to investing in precious metals, there are a variety of ways for investors to participate. Those seeking to hold physical bullion can buy minted coins and bars and store them at their home or in a safety deposit box. Others may choose to invest in a variety of investment products that include precious metals, such as shares of mining companies and exchange-traded funds (ETFs) that offer leveraged exposure or are fully backed by bullion. Futures contracts and options are other methods that allow investors to place bets on the price of a particular precious metal.

Investing in physical metals can be more liquid than other investments, the 39th official annual release such as stocks or bonds. However, fees and storage costs can add up. Investors should consider the amount they want to invest and their time horizon when considering whether to purchase metal bars or bullion. They should also consider how easy it will be to sell or recoup their investment when the need arises.

Many investors choose to buy gold and silver through mining company stocks or mutual funds. These investments, which are backed by the performance of bullion, are a good choice for investors who already have experience buying and selling traditional equities. However, they should remember that these stocks are often leveraged to movements in the prices of the underlying precious metals.

The value of a precious metal can be affected by a number of economic factors, including global supply and demand, political stability and inflation. Silver is a popular investment due to its wide range of industrial and high-technology applications, such as solar energy panels, mobile phones and car electrical systems. Silver typically performs better in the face of a weak economy and higher inflation than does gold.

Gold is a safe haven asset, attracting investment and interest when equity markets fall and when there are signs of economic uncertainty. It also tends to perform well when local currencies depreciate against the US dollar.

While the returns on precious metals have historically been low, they can provide a hedge against the volatility of the stock market and other forms of money management. They are also a way for investors to diversify their portfolios with non-correlated assets. In 2022, when stocks and bonds suffered double-digit losses, gold gained 0.4%, while silver jumped 6.3%.

Those new to investing should seek out the advice of financial professionals before committing any money to precious metals. They should also determine their goals and risk tolerance before deciding whether to invest in physical metal or invest in the stocks, ETFs and other options that are available. Lastly, they should be on guard against unscrupulous salespeople who promise a quick and easy path to riches with little or no risk. Investors should ask for a risk disclosure statement and carefully review any contract or other documents before sending money, and be sure to get the name of the salesperson. Ideally, they should never send money to any individual without this information.