Precious Metals Investments
Gold, Silver & Co.
Precious metals provide a useful and effective means of diversifying a portfolio. There are some reasons why doing so may be a good part of your investment strategy. Precious metals generally offer unique protection against inflation and insurance against financial or political disasters. Due to their widespread industrial applications, they also have intrinsic value as well as a low correlation to stocks and bonds, hence a small percentage in a portfolio can reduce volatility and risk.
Before you decide to invest, it is important to be aware of the different ways in which you can do this. Currently, there are 5 ways of investing in precious metals - through tangible coins and bars, precious metals mutual funds, certificates, gold and metal futures and stocks in mining companies. Like all other investment tools though, investing in precious metals also has risks associated with it. Depending on what state of the economy is in, some of the investment options will not be attractive. For example, if the economy is in a downturn, it is better not to invest in mutual funds and stocks. If you are concerned about the safety and diversity of your portfolio, it is preferable to purchase coins and bars.
If you would rather not store gold and other precious metals, you can opt for certificates instead. A certificate represents your ownership of a certain quantity of specific metals. The disadvantage with certificates is that they are generally more expensive than the actual stock. Precious metals mutual funds are a good way to invest, especially when the economy is doing well. Because funds are typically varied and managed, they are considered more stable than stocks.
If you are considering a higher return alternative, futures are most likely to be your best move, although this is a higher risk option. On the other hand, the value of these futures will change solely on the direction of the value of the metals during the contract term. They are not affected by the state of the economy.
Gold and silver are not the only precious metals on the block. There are a number of other options. You can buy the stocks of companies that mine uranium as well as base metals like copper, nickel and zinc. Palladium and platinum may are also very much worth considering. These metals are coveted for high-tech uses and have soared in value the past few years. While gold and silver are locked in the teeth of a grinding bear market, this is not the case with platinum and palladium. The increasing use of platinum and palladium in the car industry is expected to help drive consumption up even further. In fact, while global demand is surging, continued labour unrest in South Africa is beginning to affect supplies. The resulting shortage promises to boost the value of both platinum and palladium.
To invest in precious metals you will need to find a metal dealer whereby you will have a choice of either online or bricks and mortar dealers. It is important to ensure that you check their credentials before deciding to transact with them. You can of course, trade the precious metals gold, silver and platinum with binary options broker Banc De Binary too.