In recent years, investors have been spooked when it comes to putting their money into the stock market and traditional forms of investment. Many millions of investors lost their retirement money and their nest eggs when the financial crisis of 2008 occurred. Because of this, many people are hesitant to simply trust the market and throw their money back toward it in hopes of doing better in the future. This has lead to an unbelievable amount of volatility in the market, which makes it even more difficult for people to pick winners and losers in the stock market. Due to this uncertainty, many investors are looking for a legitimate alternative to what they can find in the stock and bond markets. Precious metals may be exactly what these types of investors are looking for.
Why Invest in Precious Metals?
Precious metals provide a number of benefits that you simply can’t get from other types of securities. One of the major advantages of precious metals is that you get something that is a store of value. It has an intrinsic value simply because it is scarce. Someone cannot simply fire up a printing press or hit a few buttons on the computer to create more precious metal. With paper money, not only is it possible to create more, central banks do it constantly. In fact, the Federal Reserve has tripled the money supply in recent years in response to all of the economic problems that have taken place.
Because of all of this money printing, it’s actually driven up the values of the precious metals in the market. Gold, silver, palladium, and other precious metals have seen significant gains since the troubles began. Investors see precious metals as a safe haven when there is financial trouble. That’s because precious metals have been valued by every society and always have some kind of inherent value. No matter how far the price of these precious metals might fall, the metal has some tangible value, unlike stocks and bonds.
Another reason to invest in precious metals is because they are poised to become even more valuable in the future. While it’s hard to imagine the price of gold going up even further compared to what it is now, there’s a good chance that it will do just that. There’s only so much of these precious metals that can be mined. More and more electronic devices are using precious metals as part of their components, and this helps drive up the price as well. When gold and silver start becoming scarce and more electronic companies are bidding for the available supply, you can rest assured that the prices are going to go up. While no one knows when that will be, it is definitely headed in that direction.
Ways to Invest
If you are interested in owning precious metals, there are a number of different ways that you could choose to invest, depending on your preference. One of the simplest ways to invest in precious metals is to buy it in physical form. With this approach, you buy bullion and store it yourself. Bullion could come in the form of coins or bars. The advantage of this method is that you have full control over your precious metals. You don’t have to trust anyone else to watch over them for you. On the other hand, you have to be responsible for watching out for some very valuable property. This is going to require you to get a safe or some other type of secure storage facility if you have very much of it. If you are concerned that there could be societal unrest at some point, you’ll be glad that you have some precious metals to barter with. They are always a store of value and can be used in many different situations to get what you need.
Another option is to buy certificates. With this approach, you buy certificates from secure storage facilities that warehouse your precious metals for you. You have a certificate and it says how much of a precious metal you own. This is handy because you don’t have to worry about the safety factor of keeping your precious metals on hand. At the same time, you have to trust someone else to keep your precious metals safe for you. In some cases, there have been scams where precious metals companies sold the same metals multiple times to investors instead of allocating it correctly.
You can also invest in precious metals by purchasing shares of stock or funds. Precious metals funds buy metals as their underlying securities. You can buy stocks of mining companies to speculate on the prices of precious metals.
Getting a Good Deal
When you are interested in getting involved in precious metals investing, it is important to make sure that you get a good deal. When you work with a precious metals dealer, you’ll have to pay a “spread.” This is essentially an amount of money that the broker charges you on top of what you’re paying for the metal. Try to shop around a bit and find a broker that offers a good spread.
In addition to looking for a good spread, you should also find out what the spot price is before you get ready to buy. One of the best resources for this is Monex. At Monex, you can get all of the latest charts on precious metals so that you’ll know what they are trading for in the real market. When you go to buy from a dealer or broker, they’ll sell you the metal for the spot price plus their spread amount. Because of this, you need to make sure that the dealer is using the latest spot price when they quote you the metals. Otherwise, you might end up paying more than what you should really have to pay.
Considerations
In these times of economic uncertainty, there are so many questions that people have about what to do with their money. In reality, one of the safest things that you could do would be to put some of it into precious metals. Even though we are in tough times, the government leaders do not seem to be interested in changing what they’re doing any time soon. They will keep borrowing more money to finance the things they want to purchase and the Fed will keep printing more and more money to help. This means that the value of the dollar and all assets that are tied to the dollar are eventually going to decline. If you’re left with a bunch of gold, silver, palladium, and platinum in your portfolio, you’re going to be looking like a genius while everyone else is struggling. At the very worst-case scenario, the precious metals should be able to hold their value. If you compare that to the stock market, you can’t really say that about those securities. They could literally be worth nothing if the company behind the shares went bankrupt.
Instead of blindly throwing your money at whatever your financial advisor tells you to, why not try something different for a change? You can start off small and buy a few coins or bars now and again. Before you know it, your collection of precious metals will be growing and the value of your portfolio will be growing with it. Just make sure that you get involved while the prices of these metals are still reasonable enough for the average person to pay.
http://www.forbes.com/sites/michaelpollaro/2012/03/17/money-supply-booming-seeds-of-the-next-greater-recession/
