All high profile traders will tell you a key to building an empire is having a safety net for when things turn unexpectedly. The benefits of investing in precious metals like gold and silver are that safety net. A tangible good that can be traded for other tangible goods.
With stocks and paper money, they can create more with printing and offerings. With gold, we can say that there is a finite amount so the gold market is null to self inflation because of the relative difficulty in extraction.
Silver is much more prevalent and the demand is not as high as gold. As a result there is a drastic price difference.
Holding physical assets like precious metals and real estate allow you to diversify your portfolio. A diversified portfolio allows you to hedge your risk in a volatile mark like what we have now.
You should buy gold and silver the same as any long term stock, look for a great price and know that it will take a while to pay so you will be holding it for a period of time. As a result, holding long term is one of the benefits of investing in precious metals.
BENEFITS OF INVESTING IN PRECIOUS METALS
Just like buying life and health insurance, when buying insurance for your wealth, you want to buy from a representative with great history. The benefits of investing in precious metals are the save havens they provide. Typically you can also buy from local coin shops.
However, the same caution should be taken with them as with online brokers. A worthy side note is that most of your reputable online brokers will have a physical location.
APMEX– A company with a strong history in the precious metals. They have both physical and online retail outlets. They never claim to have the lowest prices but they have always had a great track record about delivering what you buy and being fair to the market.
Provident Metals– a physical and online broker. Their online portion of the company was built at the request of customers who were looking for an online dealer with the record of a good physical one. Provident filled this gap and has been delivering great service both online and in person.
Westminster Mint– Precious metals has always been their trade. Having a selection of gold but primarily silver; the mint is a great place to start. They have an A+ rating from the BBB.
Shipping is simple and their customer service department are very helpful. Pricing is close to with in a few percent of market value. Over all they are a great company to work with.
BENEFITS OF INVESTING IN PRECIOUS METALS – HALLMARKS
Buying jewelry can be a costly mistake if you are not able to identify what the jewelry actually is. It’s smart not advise someone just starting out to buy in jewelry. Still you may come across a piece at a good deal. This is what you should look for to identify what it is made of and if it will be of value to you.
HallMarks are a guarantee of metal purity. All fine gold or silver have markings in a fashion to identify how pure it is, who processed the the original gold and then the makers mark. It’s important not confuse a brand mark with a makers mark.
Here are a few examples of all three marks.
BENEFITS OF INVESTING IN PRECIOUS METALS – BASIC TERMS
Before hopping online or riding down to the local coin shop here are a few terms you should know. The lingo with precious metal dealers is as simple as our stock market trading terms so nothing too difficult.
- Bullion(bull-yen): precious metal typically gold or silver that has not been minted into coin
- Troy ounce: The unit of measure commonly used for precious metals
- Ask: the coin or bar’s selling price
- Bid: the coin or bar’s buyback price
- Coin Grading: the system used to describe the condition of the coin (typically on a low-to-high scale of 1-70)
- Markup: how much the seller is selling the metal above market price.
- Melt Value: the value of a coin or bar based on the precious metal content then multiplied by the price of the metal.
- Obverse: the front or “head” side of the coin
- Premium: the amount charged above a coin or bar’s melt value
- Reverse: the back or “tail” side of a coin
- Spread: the difference between what a coin or bar’s asking price and the bid price
- Spot Price: The current market value.
These are just a few basic terms you should be familiar with just starting out.
BENEFITS OF INVESTING IN PRECIOUS METALS – FINAL THOUGHTS
Risk management assets are the building blocks for a healthy portfolio. You should look into offsetting your portfolio with hard assets like gold and silver. While you can not exactly practice investing in precious metals like with paper trading, you can seek out information to help you with this type of investing.
When investing in metal assets like these you need to also understand that it will not pay you dividends. Your ROI will only come when it is sold in the future. Also keep storage in mind when buying large amounts of precious metals.