Why Investing In Precious Metals Is Important When Other Markets Are Flat

Why Investing In Precious Metals Is Important When Other Markets Are Flat 5.00/5 (100.00%) 4 votes

For years, experienced investors have taken advantage of investing in precious metals that include platinum, palladium, gold and silver. These precious metals have offered financial stability to investment portfolios in times of worldwide economic uncertainty, and when other financial institutions have become unpredictable.

Anytime the world economies, or stock markets, begin to fall or remain flat, investors tend to seek safe haven alternatives. They will often remove their investment money out of risky instruments and put it into either a savings account, or purchase savings bonds or precious metals. Many investors recognize that precious metals can significantly outperform nearly every other type of investing solution, especially in times of economic instability.

Diversify a Portfolio by Investing in Precious Metals

When used correctly, precious metals can be an effective and successful component to diversify any investor’s portfolio. However, like all investment instruments, they provide their own uncertainty and risk. To succeed at investing in precious metals to diversify a portfolio, it is imperative to use the proper mix of various trading instruments including stocks, bonds, treasury bills, collectibles and precious metals.

While silver and gold have the advantage of being universally recognized for their stored value, platinum and palladium also have significant worth due to their use in commercial industries including medical equipment, electronics, and the automotive industry. Gold and palladium are extremely high in price, and can be out of reach for many investors. Alternatively, platinum and silver are affordably priced to meet the budget of any investment portfolio. Both platinum and silver have high demand in the automotive industry due to their catalytic reaction properties. They work as the ideal solution for industrial scrubbers and catalytic converters.

Investors that seek the recommendations of financial advisors are often directed to invest their assets in a variety of unrelated trading instruments. Their investment of precious metals should range between 10% and 20%, with a lion’s share of physical gold, silver, palladium and platinum as bullion bars and coins.

The same financial advisors recommend only purchasing bullion coins and bars from reputable brokers to ensure the precious metals are pure, or nearly pure. This will assure the investor that they hold a high value investment tool that can easily be stored away in a safety deposit box or safe.

Physically holding the precious metal in storage provides the investor the opportunity to gain access to their investments instantly. Physical precious metals bullion is extremely liquid, and can be converted into cash, or bartered for other goods nearly anywhere in the world. They can be purchased in small enough sizes to be easy to transport. Many available pieces are small enough to be affordable to every investor or collector, especially those that are just beginning to diversify their portfolio.

5 Principal Components

There are five principal components involving investing in precious metals. These include metals futures, owning stock in precious metals mining companies, mutual funds revolving around gold, silver, palladium and platinum, certificates, intangible bars and coins.

Experienced investors typically select bars or coins because they provide easy portability, safety, diversity and convenience. Precious metals bullion bars are crafted using pure, or nearly pure metal. Coins can be purchased as a bullion or numismatic (collectible) coin. The numismatic coin is minted. It can be a historical piece that dates back thousands of years, or a coin currently in circulation, or one that is minted specifically to commemorate an occasion.

Investing in precious metals provides the investor an effective and useful mean to diversify and strengthen their portfolio. It serves as a valuable way to accumulate wealth and can be used as a tool to easily transfer assets down to the next generation.