If you’re looking to invest in precious metals, there are several options to consider, including gold, silver, and platinum. Understanding what makes these precious metals unique and how they can diversify your portfolio is critical for making the right investment decisions for your financial health.
Investing in Gold
Gold has been a popular investment for thousands of years due to its intrinsic value and stability. It has been used as a currency, store of value, investment asset, and a symbol of wealth and prosperity, maintaining a steady increase in value. As of April 18, 2023, the value of gold was $2,003.93 per troy ounce.
Although fiat currency has replaced gold-backed money virtually everywhere today, gold remains a critical part of the world’s economy as an investment commodity. As of March 2023, central banks worldwide hold approximately 20% of all the gold ever mined on Earth.
Although the cost of significant quantities of gold can be prohibitive for some newer investors, most consider it an excellent investment option for multiple reasons:
- It is a stable store of value. If you are primarily interested in preserving your wealth in the long term, buying gold may be a good investment option for you because it historically holds its value well.
- It is the traditional choice for investors looking to hedge against inflation. Whenever the value of the U.S. dollar declines from inflation, holding gold allows investors to limit wealth losses because gold prices typically rise alongside inflation rates.
- It is regarded as a safe haven during times of uncertainty. Individuals and financial instruments have used gold to protect their wealth from economic uncertainties, particularly in countries that have experienced conflict, economic collapse, and other economic or political hardships.
- It is a safe, low-risk asset, making it an ideal option for diversifying your investment portfolio. Studies reveal that portfolios holding gold have traditionally been dominant over those that did not because it provides investors with returns when other commodities or stocks don’t.
How to Invest in Gold
Although you can invest in gold through many avenues, the best and safest method is buying physical gold bullion assets from a reputable gold dealer, like gold bars or coins, is the best and safest way. At AU Precious Metals, our knowledgeable staff can help you choose the best gold investment method for your portfolio goals.
Physical gold is a tangible asset. Unlike fiat currency or stocks, the primary benefit of tangible assets are stability and security: you can hold them in your hand, they cannot be artificially created or duplicated, and they carry intrinsic value. Hard assets like physical gold are also immune to threats against modern banking, such as hackers or data loss.
Precious metal assets of all types are referred to as investment-grade when they are manufactured using high-purity materials. Investment grade gold must be labeled 995, corresponding to 99.5% purity. A common example of a 995 gold asset is the 995.0 gold kilobar, an international standard for gold bars weighing 1 kilogram.
Many gold assets use higher purity levels, such as fine gold (999 purity). The highest purity level most investors are likely to see is 999.9 (also denominated 9999), such as gold coins produced by the Royal Canadian Mint.
Investing in Silver
Silver is much like gold, but a lot more volatile then gold and has been used to achieve the same economic goals for almost as long and has nearly as much cultural significance.
Many financial systems in history have used a bimetallic system combining gold and silver, and many languages use the same words for “silver” and “money.”
Silver is the precious metal that survived the longest in the U.S. currency system, starting in 1785 with the adoption of a silver standard based on the Spanish milled dollar. The use of silver in U.S. circulation currency ended in 1971 with the Nixon Shock, the discontinuation of the Bretton-Woods System, and the removal of silver from circulation currency.
Today, silver is primarily used as an industrial metal and investment asset. However, silver’s value has historically been lower than gold’s. As of April 18, 2023, the value of silver was $25.21 per troy ounce.
Since silver is relatively inexpensive in comparison to gold, it is a great way to invest a small amount of money and build a portfolio from scratch. Investors looking to add silver to their portfolios typically seek the following benefits:
- Despite its higher volatility, silver has many of the same benefits as gold, such as offering a hedge against inflation and being a stable store of value.
- Silver is less expensive than many other precious metals, making it a more affordable and accessible investment asset than gold or platinum.
- Silver prices fluctuate more than gold prices, creating more risk but also opportunities for higher returns.
How to Invest in Silver
As with gold, the safest way to invest in gold is to purchase physical assets from reputable silver dealers like AU Precious Metals. Our staff specializes in physical assets and will guide you through the investment process to ensure you make the best decisions for your portfolio.
The minimum purity level for investment-grade silver is typically 999 or three-nines fine. It differs from the silver materials employed in jewelry, such as sterling silver (925 purity) or Britannia silver (958).
Only modern-production silver coins are investment-grade. Historical silver coins, such as U.S. dimes, quarters, and half-dollars produced before 1965, traditionally used an alloy known as coin silver, which was equivalent to 900 purity. A modern production equivalent like the 2021 U.S. Morgan Dollar is manufactured from three-nines fine silver.
Investing in Platinum
Although platinum dates as far back as Ancient Egypt, platinum was considered an impurity of gold and was sometimes mistaken for silver due to its similar color and appearance.
It wasn’t until the 19th century that technology progressed far enough to refine it and other metals in the platinum group, such as palladium, rhodium, osmium, iridium, and ruthenium. The first platinum coins were minted in Russia in 1828. They were 3-ruble, 6-ruble, and 12-ruble coins, circulating as legal tender from 1828 to 1845.
However, platinum only started becoming a popular alternative to gold and silver as an investment asset in the 1970s. The first platinum bullion bars were produced in 1975 by Japanese bullion house Tanaka Kikinzoku, allowing platinum to become an investment commodity. Investors looking to invest in physical precious metals favor platinum for the following reasons:
- Platinum is 30 times rarer than gold in nature. The metal’s rarity contributes to its high monetary value, making it a safe store of wealth. As of April 18, 2023, the value of platinum was $1,082.50 per troy ounce.
- Platinum prices are volatile and subject to more substantial price fluctuations than gold or silver. Because platinum is both high-value and volatile, it is a risky but potentially lucrative asset for speculation and short-term profits.
- Although platinum hasn’t historically been viewed as a hedge against inflation, it is gaining momentum as an alternative to gold and silver.
How to Invest in Platinum
The best platinum investment method is to purchase physical assets from a reputable platinum dealer. At AU Precious Metals, we carry an extensive selection of platinum bullion assets, including coins and bars of numerous types and denominations. This lets you decide the best way to add platinum to your portfolio.
All platinum bullion is investment-grade and features a purity level of 999.5 or better. Platinum jewelry typically ranges from 850 to 950.
The most common way to invest in physical platinum is to purchase platinum bars. Like gold and silver, platinum bars are available in various standardized sizes, from small 1 ounce bars to large 1 kg platinum kilobars.
Although they haven’t been on the market as long as gold and silver equivalents, many government mints offer platinum coins. For example, the U.S. Mint produces the American Platinum Eagle series, with face values ranging from $10 (0.1 troy ounce) to $100 (1 troy ounce).
Invest in Gold, Silver, and Platinum Assets with AU Precious Metals
AU Precious Metals is a leading broker of precious metal assets in Michigan. We aim to make investing in precious metals and diversifying your portfolio as easy and convenient as possible.
Contact us today to learn more or to arrange a visit to one of our locations in Rochester and Novi.