You’d be hard-pressed to try and find someone who isn’t looking for an extra source of income these days. Everybody is on the lookout for ways to make more money because living paycheck to paycheck isn’t cutting it anymore for most people. They want some form of financial security in the future, and that entails doing more than spending your entire salary on bills and debt every month. Some invest in the stock market, risking its volatility, while others try their luck with real estate.
One option that many people don’t consider, though, is precious metals, despite being one of the best investment opportunities out there. This guide will help you get into that world.
Choosing the Right Metal
Before you can start investing in metals, you need to understand what kinds of metals you can invest in. It goes without saying that the first option on that list is none other than gold, which has always been valuable and always will be. This precious metal is known for its durability since it doesn’t rust or even corrode. It’s also famous for its malleability, which makes it quite useful in a number of applications.
Still, gold is most often used as currency or jewelry. While gold prices aren’t usually affected by your average supply and demand, they vary depending on the current state of the country. Whenever people start hoarding it for financial or political reasons, its price may increase. Other than that, if all is normal and people are buying gold for sentimental reasons or even as currency, you won’t see much variation in its pricing, which isn’t bad, because gold always retains value.
You then have silver as a precious metal to invest in, but it can be a lot more volatile than gold. Unlike the latter, silver can be used for its value or it can be used for industrial purposes. This leads to price fluctuations depending on its current value in the market and the applications it is used within. Last but not least, you have platinum, which is also traded around the day, and is considered one of the finest precious metals. It is considered even more valuable than gold because it is much scarcer. It also has some industrial applications like silver, mostly in the automotive industry, which also leads to its volatility.
Identifying the precious metal you want to invest in is only the beginning. You then need to figure out how exactly you are going to invest in it, and what your business plan for this investment will be. As explained on irainvesting.com, one of the most popular –– and financially smart –– investment in precious metals is using them in your Individual Retirement Account (IRA). Particularly, investors use gold for this option, and it is a great way to ensure that your retirement plan wouldn’t be affected by inflation or any other external factors.
Your next best option will be Commodity Exchange-Traded Funds (ETFs), which are also pretty popular among precious metal traders. You can use them with gold, silver, and platinum, and they offer a convenient and easily accessible way to trade in those metals. More importantly, it is a liquid approach to dealing with them. You should know, though, that you don’t have actual access to the metals; as in, you can’t ask for a gold bar or a silver coin.
Another approach people take is investing in precious metal stocks, but this may be risky because you need to understand how the market works, and what affects price changes. You can also get the precious metals, as in getting a hold of the physical commodity, but this isn’t a very liquid option, and you need to have somewhere to store them.
If you want a somewhat riskier option, then you could go with futures and options, which are probably the most liquid approach you can invest in when it comes to precious metals. More importantly, this option gives you the chance to make large investments in gold, silver, platinum, and other precious metals. So, you stand to make huge profits here, but also sustain massive losses.
Why You Should Trade in Precious Metals
Precious metals are rare, and they are not easy to mine. This means their value isn’t likely to drop, so it is always a good investment. More importantly, their value isn’t affected by inflation for the most part, negatively at least. So, if a country devalues its currency, gold will still be a precious metal. On the contrary, it will be more expensive to buy. In short, precious metals will always have a market, and they can be a pretty good investment for the future.
More importantly, precious metals have a ton of industrial and technological uses, which means they make for a very good investment in this age of technology we live in. Even the rarer types like gold and palladium have a lot of uses in different industries, which only adds to their overall worth. One more angle you should consider is the fact that there are some very rare precious metal coins in the market, collector’s items so to speak. If you managed to get a hold of some of these, you stand to make a lot of money because those are always in demand and some people will pay a lot of money for them.
Trading with precious metals is not without risks, which is something you need to take into consideration. If a country is too economically stable, prices may drop a bit because people don’t invest in precious metals without there being an economic decline. Depletion is one more problem that might occur with precious metals. If the demand is very high, current supplies might be depleted, which could easily fluctuate the market and change your plans.
This happens because precious metal producers will need to bring in more metals to the market, and if there’s a shortage in any of those, prices can surge. That being said, gold, silver, and platinum are still more secure investment options than most.