Precious metals can be a great investment opportunity that could help you diversify your portfolio and allow you to enjoy steady gains with lesser risks. You also get the benefit of being in complete control of a physical investment that has long term market value. The stability that precious metals have to offer exceeds that of other investments like stock and exchanges. If you’re planning to make your first move with investing in precious metals, here are a few things you should keep in mind.
1. The Best Way to Invest in Precious Metals
You can invest in precious metals by buying bullion bars or coins or through other financial products such as gold exchange-traded funds (ETFs). Investing in precious metals through ETFs seems convenient because of its hassle-free and inexpensive buying and selling process. However, it’s important to note that you don’t actually own the metal when you buy an ETF. That means you cannot take the metal if an emergency need arises.
On the other hand, buying bullion bars or coins allows you to not only own the metal but also store it outside the financial system so there’s no counterparty risk involved. Therefore, buying physical metal is a more sensible option. It also lets you buy small quantities of the metal that can help build your personal wealth.
2. What Kind of Returns Can You Expect
Yearly returns on precious metals can greatly vary. Precious metals tend to perform quite well even when the stock market is experiencing a downfall. People turn to alternative investments fearing a market crash when the stocks go down. As a result, the value of precious metals goes up during economic instability. Precious metals are, therefore, good security investments in the market experiencing sharp volatility and shifts.
3. Bullion Bars vs. Bullion Coins
Bullion coins are most favoured by investors because of ease of recognition, trade and the fact that they generally sell at higher premiums compared to bullion bars. Bullion bars tend to be harder to resell and the transaction costs are also higher. However, if you’re planning to buy very large quantities of precious metals, large bullion bars may be the right option for you because of their lower premiums.
4. The Risks Involved
Whether it is stocked, precious metals or anything else, there’s always some level of risk involved in every kind of investment. Even though precious metals tend to perform well and maintain or grow in value, sometimes the value of your gold coins might decline sharply. Another risk with these kinds of physical investments is that they are subject to theft. However, with the latest security measures available at safes and bank vaults, this risk is considerably minimized.
5. Investing in Mining Companies
Another option for investing in precious metals is to invest in reputable mining companies in different parts of the world such as Auctus Metals. Among the many benefits of investing in miners is that they can help you get away with a lot of issues that are related to precious metal investments. Miners pay regular dividends and produce significant cash flows and save you from considerable costs.
Your investment portfolio should contain an allocation to precious metals. It not only offers good diversification but also adds the security of physical precious metals to your long term investment plans.
