Investing in precious metals is an excellent choice for those seeking a tangible asset to diversify their portfolios. For centuries, precious metals have been a reliable store of value and a haven in times of economic uncertainty.

This article will look at the best precious metals to invest in. We will also discuss the advantages and disadvantages of investing in precious metals, precious metals investment strategies and the best ways to buy and sell them.

Types of precious metals

Gold

Which Precious Metals to Invest in?

Gold has long been considered a safe asset for the longest time. It is known for its strength, malleability, and capacity to conduct heat and electricity. It doesn’t corrode or rust. Gold is an investment expected to hold its value for many years and is also an excellent choice for portfolio diversification.

Gold’s value is determined by the market 24 hours daily, seven days a week, and is less influenced by demand and supply laws than other stocks and bonds. This is primarily due to the enormous size of the existing gold hoard, which vastly outnumbers the amount newly mined.

Several factors make gold the best metal to invest in, and they include.

  • Political and financial uncertainty. Gold has been used as a currency and a store of value for centuries. It is still a popular choice for investors worried about political and financial instability.
    When economic conditions cause other forms of currency to be volatile or depreciate in value, gold can offer investors a safe haven, as its value is largely unaffected by such external forces.
  • Inflation. Gold is prized by investors for its ability to retain its value despite inflationary pressures. Its worth is not tied to any one nation’s economy, making it a reliable option for those looking to safeguard their finances.
  • War. In war, gold is among the metals to invest in. This is because gold is a physical asset independent of financial markets and is not affected by the same economic volatility that can affect stocks, bonds, and other investments. War often leads to uncertainty and instability, affecting investment markets and currency value.

Investing in gold has some drawbacks, such as,

  • Volatility. Gold’s value fluctuates dramatically, making it a risky investment.
  • Returns are limited. Gold produces no income, and its returns are limited to the appreciation or depreciation of its value.
  • Storage charges. If you buy physical gold, you may need to find a safe, insured vault or storage facility to keep it in. This will incur additional costs.
  • Counterparty Danger. When you buy gold from a dealer, you expose yourself to counterparty risk. This means you may be unable to recover your funds if the dealer goes bankrupt.
  • Taxes. Gold investments may be subject to capital gains or sales taxes.

Also Read: investing in gold for retirement

Silver

If you are wondering what is the best metal to invest in right now, consider silver. It is an attractive precious metal whose price is significantly lower than gold. It is also a valuable industrial metal used in various consumer and industrial applications.

It is used in the electrical and electronics industries, coin production, and the manufacture of solar panels and other renewable energy technologies. It is also used in the medical, automotive, and defence industries.

Silver may be an excellent long-term metal to invest in due to its rising demand influenced by technological advancements and its use in renewable energy. Investors should consider silver as a hedge against inflation, a store of value, and an investment in technological advances.

Silver can be acquired by investing in physical silver, silver ETFs, or silver mining stocks. Coins, bars, and bullion are all physical silver that can be purchased. Silver exchange-traded funds (ETFs) and mutual funds (MFs) are excellent ways to gain exposure to silver without purchasing and storing physical silver.

Also Read: investing in silver for beginners

Platinum

Platinum is an excellent metal investment because it is rare than gold or silver and commands a higher price when markets and economies are stable. Its primary applications are in the automotive industry, which is heavily influenced by clean air legislation. As a result, if legislation requires more catalytic converters, the demand for platinum rises, causing the price to rise.

Furthermore, platinum is widely used in the jewelry, computer and smartphone industries, as well as petroleum and chemical refining, providing a more robust and diverse source of demand.

It is important to note that although platinum prices may be volatile due to changes in the global economy, it is generally seen as a safe-haven investment as it is not directly tied to the whims of the stock market. This makes it an attractive option for those looking for a long-term investment.

Palladium

Palladium is a highly sought-after metal due to its efficacy as a catalyst in catalytic converters and its remarkable 12.6% hardness compared to platinum. The automotive industry’s increased demand for palladium has made it a lucrative and highly liquid investment opportunity.

Palladium is also a popular investment because it is a rare metal with a limited supply. A single ounce of palladium requires approximately 4 tons of ore. This means that, unlike gold and silver, palladium prices are more susceptible to supply and demand fluctuations.

Palladium has become an increasingly popular investment due to its scarcity and wide range of industrial applications, particularly in the last decade. Palladium coins, bullion, and other metal forms are available to investors. Palladium can be an excellent addition to any portfolio as an inflation hedge and a potential source of long-term capital gains.

What percentage of your portfolio should be allocated to precious metals?

Your investment objectives and risk tolerance will determine the percentage of your portfolio that should be allocated to precious metals. It is generally recommended that you allocate at most 5-10 % of your portfolio to precious metals investments. That being said, conducting your research and weighing your options before making any decisions is critical.

Below are precious metals investment options available to you.

  • Traded-Deposit Funds (ETFs). An ETF is a sort of investment fund that tracks the price of a basket of precious metals. Investors can invest in precious metals without buying and storing physical metals through exchange-traded funds (ETFs), which are traded on the stock market.
  • Investment funds. Precious metals investment funds allow investors to diversify their portfolios while also gaining exposure to the metals markets. The funds typically invest in physical metal, stocks of companies involved in precious metal mining or production, or financial instruments such as exchange-traded funds (ETFs) or futures contracts..
  • Futures contracts. Futures contracts are pacts between two parties to purchase or dispose of a particular metal at a fixed price at a future date. These contracts can be utilized to speculate on the price of precious metals because they are traded on futures exchanges.
  • Stocks of precious metals. Shares of publicly traded businesses focusing on producing and distributing precious metals are known as precious metals stocks. Without having to buy and store physical metals, these stocks give investors access to the price changes of precious metals.
  • Gold and Silver Mining Stocks. Shares of publicly traded businesses that focus on discovering and extracting precious metals are known as precious metals mining stocks. Without having to buy and store physical metals, these stocks give investors access to the price changes of precious metals.
  • Actual Bullion Coins and bars made of precious metals, including gold, silver, platinum, and palladium, are referred to as physical bullion. Dealers sell these coins and bars, which can be bought and kept safely.

Why it is ideal to go for metal investments

  • Precious metals are a popular investment option due to their stability. Unlike stock and bond markets, the price of precious metals does not fluctuate nearly as much. This makes them an ideal option for investors who want to protect their capital from the volatility of other markets.
  • Precious metals are often seen as a safe investment option in times of economic uncertainty due to their ability to maintain their intrinsic value.
  • This makes them a reliable hedge against inflation and currency devaluation, as their value does not fluctuate with the same volatility as stocks and other assets. Additionally, precious metals can be held in physical form, allowing investors to protect their assets from potential fluctuations in the stock market.
  • Precious metals have historically been a reliable store of value, making them a great way to preserve wealth over the long term.Certificates offer investors the benefits of owning physical gold without the hassle of transportation and storage. However, they do not protect against a natural disaster, as they are merely paper documents and are not accepted in exchange for anything of value.

Conclusion

Investing in precious metals is a wise choice for diversifying portfolios and protecting their wealth. Gold, silver, platinum, and palladium are excellent precious metals to consider investing in, offering potential protection against inflation, currency devaluation, and economic uncertainty.

While each of these metals has its benefits and drawbacks, they all have the potential to generate a return on investment over the long term. Investing in precious metals is not without risk, but it can provide investors with the peace of mind that their wealth is protected against economic volatility.

Tim Schmidt

About 

 
Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He's also a published author, and his views on investing have been featured in USA Today, Tech Times, The Huffington Post, Nasdaq, and many more.