Benefits of Investing in Precious Metals

Benefits of Investing in Precious Metals

6 min read

The benefits of investing in precious metals like gold and silver are a safety net. Many high-profile traders will tell you the key to building an empire is having a safety net for when things turn unexpectedly. A tangible good that can be traded for other tangible goods. They typically hold their value over time. There are lots of reasons people like having a stash of precious metals. With stocks and paper money, they can create more with printing and offerings.

Holding physical assets like precious metals and real estate allows you to diversify your portfolio. A diversified portfolio allows you to hedge your risk in a volatile market like ours. Gold has been valuable for thousands of years by both civilized and uncivilized world cultures. 

Silver is much more prevalent, and its demand is not as high as gold’s. As a result, there is a drastic price difference.

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 that you will hold it for some time.

As a result, holding long-term is one of the benefits of investing in precious metals. As always, check the charts and look at gold’s weekly, monthly, and yearly trends.

You can tell a lot by learning and studying the charts. 

Investing in Precious Metals

1. Insurance

OK, just like buying life and health insurance, you want to buy from a representative with a great history when buying insurance for your wealth.

The benefits of investing in precious metals are the safe havens they provide. Typically, you can also buy from local coin shops.

So look, find shops near you, and check them out in person. Pick a shop in a good area of town and avoid pawn shops if possible.

Always play it safe. Caution should be taken with any source you go to in person, as with online brokers. A worthy side note is that most reputable online brokers will have a physical location.

Google their office location. Do your due diligence. Sniff them out!

2. Reputation Is Important

Here are some companies (we have no affiliation) that have good reputations.

APMEX is a company with a strong history in 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 of delivering what you buy and being fair to the market. Sometimes you pay extra, but you have the peace of mind you’re dealing with a good company with excellent service. 

Provident Metals is a physical and online broker. The online portion of the company was built at the request of customers looking for an online dealer with a record of a good physical one. Provident filled this gap and delivered great service online and in person.

Westminster Mint– Precious metals have 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 is very helpful. Pricing is close to within a few percent of market value. Overall, they are a great company; you can’t go wrong with them.

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3. Hallmarks

Buying jewelry can be a costly mistake if you cannot identify what the jewelry is. It’s smart not to advise someone just starting to buy jewelry. Still, you may come across a piece at a good deal. You should look for this to identify what it is made of and if it will be of value to you. Hence, there are benefits to investing in precious metals.

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 original gold, and then the maker’s mark. It’s important not to confuse a brand with a maker’s mark. Here are a few examples of all three marks below.

Terminology

Before hopping online or riding down to the local coin shop, here are a few terms you should know. The terminology with precious metal dealers is as simple as 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 is the seller selling the metal above market price?
  • Melt Value: a coin or bar value based on the precious metal content multiplied by the metal’s price.
  • 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 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 know when learning about the benefits of investing in precious metals.

Final Thoughts: Benefits of Investing in Precious Metals

The benefits of investing in precious metals help any portfolio. Risk management assets are the building blocks for a healthy portfolio. It would be best to consider offsetting your portfolio with hard assets like gold and silver. 

While you can’t exactly practice investing in precious metals like paper trading, you can seek information to help with this type of investing.

When investing in metal assets like these, you must understand that it won’t pay you dividends. Your ROI only comes when it’s sold in the future. The price of gold typically gets more volatile around economic events! Look at gold prices around major elections, major economic data reports, and FOMC meetings.

Gold has many uses, making it valuable to people for different reasons. It can be turned into thread and used in embroidering.

Also, gold is an effective reflector of electromagnetic radiation, such as infrared light, visible light, and radio waves. It’s used as a protective coating on satellites and for thermal protection in astronaut suits and helmets.

Being a great conductor of electricity, gold is used in electronic cables like those used in their home audio and video equipment. 

“Because gold is honest money, it is disliked by dishonest men.” – Ron Paul.

Also, keep storage in mind when buying large amounts of precious metals. 

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