If you’re looking for ways to diversify your portfolio and build wealth, you may consider investing in precious metals. Gold, silver and platinum are the most popular forms of this type of investment, but there are many others.
The Pros of Precious Metals
In addition to being a safe haven for wealth protection, precious metals can also provide a hedge against inflation and currency weakness. For instance, during the recent collapse of Argentina and Turkey, savvy investors held precious metals to gain protection from currency fluctuations that affected their domestic economies.
The Cons of Investing in Precious Metals
In some cases, investing in gold and silver can be too risky. This is especially true when you are leveraging the value of these investments by borrowing money to purchase them. This can lead to a loss in value, and it is important to understand the risk involved.
Leverage risks can also occur when you invest in precious-metal-related exchange-traded funds (ETFs). ETFs are a convenient way to buy and sell shares of precious-metal companies, but they don’t offer the same exposure to physical bullion that a direct gold or silver investment would.
Another common strategy for investing in precious-metal markets is through futures contracts. However, futures can be a volatile market with large swings in price. This can make it difficult for a trader to enter or exit a position.
A third option is to invest in a fund that invests in companies that mine precious-metal resources. While this is less popular than other methods, it can be a viable way to diversify your portfolio and gain exposure to these markets without the high costs associated with buying directly into a precious-metal company.
Lastly, you can also invest in a closed-end fund that includes physical redemption features such as Sprott Physical Bullion Trusts or Morgan Stanley Precious Metal IRAs. These are more tax-efficient and can be a great way to get a higher percentage of your money in a tangible asset.
How Much Do I Need to Invest in Precious Metals?
Depending on your personal goals and financial situation, you will need to determine how much you want to allocate to precious-metal investments. This is a personal decision and should be made after considering your unique circumstances, age, and risk tolerance.
The best way to invest in precious-metal stocks is to buy a diversified fund that includes shares of a number of miners, or to purchase shares of a gold or silver ETF. Regardless of the approach you take, be sure to consult a qualified financial advisor before making a decision.
How Much Should I Invest in Gold?
Historically, gold has been the most widely-held precious metal. This site is because it offers a number of advantages over other forms of investment, such as a hedge against inflation, a high level of liquidity and diversification of the portfolio.
It is important to remember, however, that it will take a long time for your investments in gold and silver to increase in value. This is a good reason to have a well-diversified portfolio of assets, including cash, fixed income and equities.