A Primer for New Precious Metals Investors

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Though the United States enjoyed a period of unprecedented economic expansion and growth during the 1990s and the early 2000s, the economy here and around the world began to suffer a major downturn in 2007. By 2008 and 2009, that downturn had blossomed into a full blown recession, with countries around the planet enacting austerity measures to control their debt, rescue big banks, and save the credit markets from contracting any more than they already had. While the common wisdom is that a recovery from that downturn is currently underway, many consumers and investors are skeptical of any such recovery.

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It is the skepticism of a full recovery, and the worry about whether or not a full recovery may ever happen, that has driven increasing numbers of investors away from the stock market and toward more stable investments. One such investment is the one made in precious metals like gold, silver, platinum, or palladium. All four of these metals have experienced dynamic growth in their overall value in recent years, with gold being the leader in terms of overall value increases. Consumers seem to understand, now more than ever, that a tangible investment in an actual commodity is something that can serve them much better than a theoretical investment in a stock, index, bond or fund.

Getting started with precious metals investment does require a bit of basic knowledge, and customers would do themselves a great service to brush up on precious metals and their unique characteristics before getting too heavily involved in the industry. With a good amount of knowledge about where the market has been, where it’s going and why it’s headed that way, it’s easier to make sound investments. Furthermore, understanding how these investments are made is a key way to ensure long-term growth and healthy returns.

The Leader of the Pack: Yellow Gold
Gold has always been the leader of the pack when it comes to investing in a high-value, big return precious metal. That’s largely because of its historic reputation not only as currency, but also as the metal to which currency’s value has been tied throughout much of the past two centuries. Though it no longer enjoys that status in the United States, or in very many other countries around the world, its prestige and desirability have not worn off. It is still viewed as a viable means of exchange and trading currency or investment value, as well as a highly desirable metal in high-end jewelry.

Though most people might not think of gold as being key to technological development, the metal is actually used quite extensively in computers, tablets, smartphones, and other electronic equipment where advanced circuitry is the key to powering those devices. Because those devices are only growing in popularity, gold has remained at a premium even as an economic recovery begins to take shape.

Silver is Another Metal with Great Growth Potential
Over the course of history, silver has seemingly always taken a back seat when compared to gold. While gold enjoyed all of the prestige of being used in currency, jewelry, and other applications, silver was viewed as a compromise and “second place.” In fact, silver itself is used to denote second place in competitions like the Olympics. That might all be about to change, however, as silver becomes one of the most sought-after metals in India and China during the 21st century.

Silver is increasingly being used by developing economies in wiring, electronics manufacturing, and a number of other applications that are both highly industry and high-tech. The increasing number of uses for silver have seen it occasionally set new record highs during commodities trading, and then flirt with those highs for several weeks before approaching yet another benchmark. For consumers, this should make silver a logical choice to diversify their portfolio and move away from a gold-only investment strategy.

Platinum and Palladium Round Out the Options
If silver has long been considered a runner up in the precious metals world, and then platinum and palladium are probably tied for third. Both metals have suffered from far lower values than either silver or gold historically, though that trend is beginning to change. In recent years, palladium has found a home in catalytic converters where its unique heat-withstanding properties allow it to function better than any other metal. Demand for palladium is now on the rise in a big way, and so is its overall value in commodities trading.

Platinum, likewise, has always been viewed with a suspect eye by investors. That’s likely due to the relative scarcity of platinum itself, as well as historically low numbers of uses for the rare metal. But that is no longer the case, with platinum taking a central role in the development of a new generation of medical equipment. Platinum is also finding a home in electronic items like televisions, tablets, smartphones, and traditional computers. Its unique properties make it perfect for today’s smaller tech components, and that has driven the price of platinum up to new highs as well.

The Moral of the Story: New Highs Abound for Precious Metals of All Kinds
There are a few things that characterize the ability of precious metals to grow at any given time. The first is simply the sate of the economy. If the economy is sagging, or if its future remains uncertain, investors are likely to resort to commodities trading instead of traditional stocks and bonds. That means gold, silver, platinum, and palladium will all be on the rise. This will often correspond with a rise in the value of barrels of oil as well.

The second factor that contributes to the growth of precious metal values is simply the scarcity of the metal combined with the demand for it in everyday applications. Because all four major precious metals have found a home in electronic equipment and other everyday uses, their value is on the rise as companies buy an increasingly large amount of each. It’s important to remember that industrial demand is also paired with the demand for these metals in in jewelry, bullion coins, bars, and other outlets. It all combines to create what is currently the highest amount of demand for gold, silver, platinum, and palladium, in at least a half-century or perhaps even 100 years.

Getting Started: When is the Best Time to Buy?
Considering the almost universal upward tick in precious metal prices, it’s a good idea to buy as soon as the funds are available. Given the upward trend, consumers would be well advised to buy as many bars or coins as they can afford at any given time. Because prices are going up rather than down, this will actually minimize the cost of developing a significant precious metal investment.

Another great strategy to use when investing in precious metals investing is to monitor the market and look for “dips” in the price of gold, silver, platinum, or palladium. These dips represent infrequent decreases in the value of each metal, meaning it’s possible to buy more of each with the same amount of money that has already been reserved for the investment. Watching for temporary “dips” in prices is a well-known strategy that has commonly been used by investors in the traditional stock market, as well, since the concept is roughly the same for stocks as it is for precious metals.

Getting Started with Precious Metals Investing Requires a Good Partner
The average investor can typically head down the street, find a bank or brokerage, and make investments in anything they wish. The same is not true of gold. It’s pretty hard to walk down the street and buy a few gold coins or a few bars of platinum and then take them home for safe keeping. In lieu of traditional retail outlets for this kind of investment, prospective investors need to consider reputable online options like Monex.com and others.

Choosing an online investment resource is the perfect way to learn more about precious metals investing itself, as well as to keep up with news that will affect the price of each metal going forward. Most online precious metal investment companies offer a wide range of products, including both bars and bullion coins. Some even offer mutual funds and other traditional invest mechanisms pegged solely to the value of one or more precious metals. This can result in a really solid growth strategy that combines both the precious metals market and traditional investment methods that most consumers are quite familiar with.

As with any investment company, prospective buyers need to do careful research on each site to make sure that they’ll be getting an honest investment worth its stated value. The popularity of investing in gold and other precious metals has resulted in a large number of new, trustworthy websites, but also in a large number of scammers. With attention to detail and plenty of research, consumers can invest their money in something tangible, stable, and affordable, all while shielding themselves from the fluctuations of the traditional stock market in a time of great uncertainty.

Sources:

  • http://www.forbes.com/2010/06/22/investing-precious-metals-personal-finance-gold.html
  • http://www.dummies.com/how-to/content/precious-metals-investing-for-dummies-cheat-sheet.html
  • http://money.howstuffworks.com/personal-finance/financial-planning/precious-metals-mutual-funds1.htm
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