Getting Started Investing in the Precious Metals Market

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Getting Started Investing in the Precious Metals Market 5.00/5 (100.00%) 2 votes

While there are many different precious metals to invest in, when one is ready to begin investing in the precious metals market, gold is the best place to start. Gold retains its value all over the globe. Gold has been valued and used as a basis of trade for all of human civilization. Investing in gold, like any investment, is not without risk, but professional investors hedge against even riskier investments by purchasing gold.

The First Step

The best place to start when building a gold portfolio is to purchase physical gold. While this is just one way to begin investing in the precious metals market, it provides the best education. Physical gold can be purchased in coins, bullion, bars, or even jewelry. The gold you buy is paid for in cash equal to the current value of the gold. Once purchased the gold immediately protects the investor from currency fluctuations and inflation.

The value of gold, like any other investment, will increase and decrease in value. However, even steep declines in the value of gold should not spook an investor into selling. Over time the price will rebound. Selling gold for a loss only locks in the losses that were previously only paper losses. Owning physical gold will help an investor become acquainted with the factors that affect supply and demand, and thus the value of gold.

Branching Out

After purchasing physical gold, another way to continue investing in the precious metals market is to buy gold bullion from a commercial gold bullion bank. These banks store your gold for you. This investment allows extra physical protection for your gold. Bullion banks also make it easier to exchange gold for cash at any time. From an investment value standpoint bullion banks are similar to owning the physical gold and having it in your possession.

Intermediate Step

Once an investor is well acquainted with the ups and downs of investing in the precious metals market, it is time to take another step. Buying gold mining stocks is riskier than buying physical gold, but is a good way to take advantage of a surging stock market. Gold mining stocks rise and fall not only on the price of gold, but also on other economic and stock market trends and indicators. Owning gold mining stocks is not the best place to start when investing in the precious metals market, but it is a great place to earn extra profits once the fundamentals have been absorbed.

Advanced Step

One of the most advanced steps when investing in the precious metals market is to invest in gold in commodities markets. Commodity markets are heady places that can make the stock market trading floor seem tame in comparison. Trading any commodity, even gold, is a complicated proposition filled with great risk, but can also yield great reward. Many investors are tempted to start investing in gold by jumping into the commodities market because of all the money that can be made in just one transaction. However, starting in commodities is a poor choice because all the gains can so easily be wiped out in a single transaction.

Instead, the gradual building of a gold portfolio beginning with physical gold gives an investor training and knowledge about gold. These factors will make the investor much more profitable once the investing in the precious metals market turns to commodities.

There are many ways to make money with gold. Physical gold will turn a profit when it is sold for more than it was purchased. Buying gold stocks and trading in gold in commodity markets broadens the avenues to make profits by introducing additional elements, such as derivatives.

Gold has been a part of wealth building for all of human history. The only difference is now there are many more ways to invest in gold than ever before.

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