Since ancient times, investors have used precious metals to store and gain wealth. These metals have uses beyond their role as financial instruments, which helps their value remain stable when other investments become unpredictable.
While many precious metals exist, gold, silver, and platinum are the best investments. These metals are rare enough to have built-in price stability and are in constant demand for steady financial growth. Because of this, these metals make safe investments, particularly during inflation periods when they often do better than other investments.
Investing in precious metals can help you build wealth while protecting it from economic instability. Learn why gold, silver, and platinum are excellent investment opportunities, and how to add them to your investment portfolio with AU Precious Metals.
Why Invest in Precious Metals?
There are many ways to invest, each with unique benefits. Precious metals tend to perform well in the world trading market during recessions, and rise and fall in price separately from the stock and bond markets. For example, gold and silver rose during the Great Recession of 2008 and in 2012 almost 275% to record highs. During the COVID-19 pandemic, epidemic gold surged to over 137% to new all-time highs.
Silver also rose significantly during these times. In 2011, silver rose to $47.82 per ounce.
Precious metals are finite, tangible resources that have industrial uses beyond investment. These metals’ physicality separates them from stocks with no inherent value, which can quickly become worthless under the wrong market conditions. Precious metals always hold value and can be easily exchanged for money in difficult or uncertain economic times.
Precious metals are a great way to diversify your investment portfolio–they can minimize investment risks, and boost your portfolio regardless of broader economic circumstances, when purchased alongside other tangible and intangible assets.
Best Precious Metals for Investment
While other precious metals are available for investment, including palladium and rhodium, gold, silver, and platinum are the most popular, because they hold their value consistently over time.
Gold, silver, and platinum are tangible goods that you can store at home in a safe or air-tight container lined with soft fabric. The tangibility of these investments can give you the heightened peace of mind and sense of security, that comes from owning physical assets. They also offer high liquidity, allowing you to sell them for immediate cash when necessary.
Gold is one of the most valued precious metals in the world. Until 1971, gold was used as the basis of the US Dollar, and it still reigns dominant in the jewelry industry.
It is also used in a wide range of industrial products, from tiny circuits in semiconductors to undersea electric cables, because it is an excellent conductor of electricity.
Gold bullion is widely considered an excellent investment. Tangible commodities like gold, offer a reliable store of value and act as a buffer during times of inflation and economic uncertainty. While gold prices fluctuate short-term, they have continued to increase in value over time, making them an excellent long-term investment.
Global markets currently value gold at $1,713 per troy oz as of November 9th, 2022. That price has increased 44% over the past 5 years and 442% over the last 20 years. This steady rise has incentivized investors to put their money into gold, and has confirmed this metal’s status as a more stable place to store your wealth than the stock market.
Silver, like gold, has a long history of use as an investment metal. It was also used to mint currency in the United States, and several silver coins made before 1965 were made of 90% pure silver. Silver is still used to mint commemorative coins, make jewelry and tableware, and has various industrial application including medicine and green energy, such as solar panels.
Silver is the most reflective metal currently known, and is used heavily in optics and mirrors, along with medical applications like dental fillings and photochromatic glasses lenses. It is also naturally antibacterial and antimicrobial, leading some manufacturers to use it in products like deodorants.
Silver, like gold, is a rare material produced primarily in Mexico, Peru, and China. Silver prices are currently around $21.32 per troy oz as of November 9, 2022, with a rise of 29.5% in the last 5 years and 433% over the previous 20 years.
Platinum is a useful material and one of Earth’s rarer metals. It is unreactive, which means it never tarnishes and can be used when dealing with highly corrosive substances. Manufacturers use platinum in catalytic converters in car and truck exhaust systems, which accounts for 50% of all platinum used annually.
Platinum is also found in LCDs, fiber optic cables, pacemakers, and spark plugs and as an ingredient in some chemotherapy drugs. This vital substance is an integral part of our modern economy. South Africa and Canada produce 80% of the world’s current production. The U.S., Australia, and Zimbabwe also have smaller preserves.
The high levels of demand for this product, combined with its relative scarcity, have caused the price to remain more elevated than most other metals. It is currently $989.62 per troy ounce, with a 5-year growth of 24.03 % and a 20-year growth of 51.16%.
Platinum usually performs better during times of economic growth. When manufacturing and industrial industries boom, platinum prices often do, too. Thus, it is a valuable short-term investment that can provide greater immediate returns compared to gold.
Should You Invest in Bars or Coins?
All three metals are available in bars or coins. Both forms are excellent investment opportunities, with unique advantages. It all depends on the investor’s personal preferences and factors such as premiums, risk tolerance, short/long term goals, experience, budget, and the specific type of metal they’re investing in.
Benefits of Investing in Bars
If you’re looking to buy physical gold or platinum at the lowest price per ounce, bars would be a better option, as you can generally purchase more ounces for less money, than if you bought the same dollar amount in individual coins. In terms of silver, the opposite is true–coins are cheaper to purchase than bars.
Benefits of Buying Coins
Coins can be stores of value or collectors items, or both. Bullion coins derive their value solely from their metal content and purity, which is what investors are generally looking for. Numismatic coins can have additional value for collectors due to their appearance, age, condition, and rarity.
For the vast majority of precious metals investors, purchasing bullion coins is highly preferred over purchasing numismatic coins, unless they clearly understand the details of that very specialized market. However, some investors seek a certain physical aesthetic, and coins allow for aesthetics and value to coexist in many cases.
How to Choose the Right Precious Metal for Your Investment Portfolio
Choosing the right precious metal for your investment portfolio can help you grow your wealth at each stage of your life, and save money for future generations. No single rule will determine which metal suits you and your portfolio. The following considerations can help you better understand which metal might be the best investment for you:
Different precious metals, have vastly different price tags. Silver is by far the least expensive, at about $21.32 per troy ounce, which is only 1.24% of the cost of gold. Gold is the most expensive at $1,713 per troy oz, while platinum costs $989.62 per troy ounce, as of November 9, 2022.
Because of constant market fluctuations, and varied initial costs, investing the same amount of money in each metal, will yield highly-varied results, in both short and long term markets. Consider each metal’s initial price, and fluctuation patterns over time when making your decision.
All precious metals, in both bars and coins, are long-lasting investments. When properly stored, the metals will easily last for thousands of years. However, when considering a metal’s longevity, you should focus on price growth, rather than physical lifespan.
The future price of a metal depends on how much it is in demand in the future economy, and how much its supply grows or dwindles. There is a finite amount of each of these metals, and many are mined in unstable countries.
Understanding how future output will fluctuate, can help you choose the proper metal(s) for you.
When choosing a precious metal, you should consider the cost of buying and selling the metal. As with any investment, you want the sell-back value to be greater than the price you initially paid.
Some metals, such as gold, have more price stability than others, and some, like silver, have more market volatility. Still others, like platinum, are heavily influenced by geopolitical conditions, both where they are mined and sold. All of these factors affect the item’s sell-back value. If you are looking to grow your wealth, silver may prove a better option, whereas gold is a good choice for preserving wealth long-term.
Where to Buy Precious Metals
Precious metals can be purchased from several sources, but it is important that you purchase from a reputable source with a proven track record of honest sales. Many investors find the prices, customer service, immediate tangibility, cash payment option, and knowledge of in-person investor/investee relations, over doing business online.
How to Find a Reputable Local Dealer
Fraudulent dealers sell fake, impure, or damaged metals, inflate prices, and make false claims. Be wary of dealers who don’t allow you to inspect your final product order when it’s delivered. Also, remember never to deal with dealers who ask for payment in gift cards or money wired overseas. These are typical scam tactics.
A reputable local dealer like AU Precious Metals in Rochester and Novi, Michigan, is experienced, insured, and licensed to ensure you are getting the best metals and the best service for your money. Experienced dealers will be transparent about their products and costs and are known for their honesty, in all facets of their business.
Invest in Precious Metals to Diversify Your Portfolio
Precious metals are worthy short and long-term investments that can help you diversify your portfolio to better protect your future and pass wealth on to future generations. Visit AU Precious Metals to invest in or sell gold, silver, and platinum, as well as palladium and rhodium.
Our staff have years of experience buying and selling precious metals, and can help you maximize your investments. AU Precious Metals offers in-person and mail-in services to help you efficiently and confidently buy and sell metal.
Contact AU Precious Metals today to discover precious metal investing/selling options, and learn more about our process.