When you think of investing, what is the first thing that comes to mind? Chances are, you are probably picturing the New York Stock Exchange or government bonds. Those are the ones that get the most press in the media, at least, so they tend to be what people first think of.
However, there are plenty of other options as well in the world of investing. One prime example of this is the art of investing in precious metals. Now, if you are not familiar with that already, do not worry. Today, we will be covering it in great detail.
If any of that sounds interesting to you, or if you have been considering precious metals as an asset type you want to get involved with, make sure to stick around! While it can be somewhat difficult to sort out how to get started, thankfully there are plenty of ways to get started these days without all that stress.
To start,let us discuss some of the basics of investing that you should get familiar with. While a lot of folks may already know some of this information, we do think it is worth covering. Some additional resources include this one, though, if you’re curious.
For one thing, we can establish what investing is and what the purpose of it is. Putting it as simply as possible, it is the process of using your current money to try to garner more funds in the future through a variety of means. Additionally, though, it could be to store away net worth in a safer way than only paper currency. More on that later, though.
For now, let us focus on the basics. When people decide to invest, they do so with purpose. The goal in most circumstances is to hopefully use the initial principal amount to generate more income. It is definitely a long-term thing rather than a short-term one, at least in most cases.
Stocks are perhaps the stereotypical option for many investors. They are simply a percentage of ownership in a company – usually, a tiny fraction. Still, though, they can sometimes generate revenue on their own or can net you more if you buy them at a low price and sell them later for a higher one.
Bonds are sold by governments and are essentially a loan to the said governing body. We buy them, they generate interest, and when we cash in on them it will be worth more than when we originally purchased it if the economy has not crashed horribly. So, that is why many consider them to be fairly safe.
An Aside: Commodities
For a moment here, let us discuss commodities as assets. Precious metals fall into this category, so if you’re looking to work with an organization such as Consumer Affairs (or reading their content), it will probably help out if you’re familiar with commodities. They are a type of assets that are harvested as raw materials but can also be processed in other industries.
Common examples include the farming industry and the crops involved or even livestock. However, precious metals are the main ones that we will focus on here. They are a bit of a special case, though, so it is worth considering them.
Precious Metals: What is the Big Deal?
Since we have covered all of the basics, let us go ahead and delve into the specifics of precious metals. The main four that people invest in are silver, gold, palladium, and platinum. They are the most well-known, at least, and many of the rest of the ones considered “precious” on the periodic table are in the platinum family.
What makes them precious? Well, there are a few things of course, but the main aspect is their chemical properties. For instance, they are quite durable and are not easily corroded. Additionally, they tend to be “inert,” meaning that they do not have reactions with other elements. They are still great at conducting electricity, which is pretty invaluable considering all of them. her properties.
The fact that they are quite rare probably adds to the value as well, of course. The shiny luster they give off is what first attracted people to them, and these days, they are worth a fair amount of money. Platinum and palladium are the most expensive, but they are typically used in things like car manufacturing, so a lot of investors do not work with them directly.
In contrast, silver is the one that is the most accessible. More details can be found here in regard to that topic, https://jwm.pm-research.com/content/6/2/60.short, but it is less expensive to purchase and is made into bullion. However, it is not exactly the most popular. That crown goes gold.
What Makes Gold Special?
The big question that remains here is, of course, what sets gold apart from the other precious metals? Is there actually a reason that investors prioritize it so heavily over the rest? Well, the answer to that is “yes,” but allow us to explain.
Perhaps the biggest reason is that it is accessible but not overly “cheap.” Gold retains value across decades and even centuries and has almost always been prized by the nobility and higher-ups in society. Thus, it makes sense that it is still considered quite a prize.
However, there are also more practical reasons behind it. You see, it is quite useful in several industries such as electronics and jewelry making. A lot of phones and computers have gold in their motherboards because of how conductive it is.
Beyond just that, though, there is also the fact that all across the world, there are “peak” seasons for buying and selling gold. Its value remains relatively static, but it does get higher during October through January because of the various cultural festivals that occur across the globe. So, you are almost always bound to find an interested buyer.
How Can We Invest in Precious Metals?
For anyone who is intrigued by this idea now that we have covered it, we do have some good news. It is quite simple to start making investments in this market. You will simply have to choose what method you want to use, as well as what broker to purchase from.
One method that does not stray too far from traditional investing is to purchase stock in companies that are in the industry of precious metals in some shape or form. This could be automobile manufacturers that use platinum and palladium in their vehicles or mining companies – really, any that work in this market.
However, because these are more traditional styles of investing, you will not get the main benefit of gold specifically. That is, gold is considered to be a hedge against inflation. In explanation, this means that it is not impacted by inflation rates in the same way that say, paper currency-based assets are.
So, that is why many investors instead opt to purchase bullion directly. While this does come with some risks, there are also plenty of rewards, some of which we discussed here today. Explore what the professionals in finance and economics have to say in terms of which gold company you should buy from.
There is a plethora of them out there, after all, so it is worth checking out all of the ones that you can. Get a second opinion too, though!