The allure of investing in gold, silver, platinum, and palladium lies in their economic value as precious metals and their ability to hedge against inflation and market volatility. Precious metals are considered safe-haven assets that provide stability and security during economic uncertainty.
If you’re considering investing in precious metals, understanding the basics of the market and the different investment options available is critical so that you can diversify your portfolio and grow your assets.
Determine Your Investment Goals
Determining your investment goals is an essential first step in any investment strategy, including investing in precious metals. Your investment goals help you decide how much to invest, what types of precious metals to invest in, when and why to sell, and what form of investment to choose.
Consider the role you want precious metals to play in your portfolio. Do you want to use them to diversify your portfolio, hedge against inflation, or as a store of value? For example, gold is an excellent option for maintaining a valuable asset despite inflation and as a physical store of value. Platinum and palladium are less-used but highly profitable assets you can use to diversify your portfolio and see high returns in the right market.
Also, consider how much of your portfolio you want to allocate to precious metals. Will they make up the bulk of your investments, or do you plan to invest a smaller portion of your wealth into precious metals?
AU Precious Metals can help you understand the potential risks and rewards of investing in various precious metals and how they fit into your overall investment strategy.
Choose a Type of Precious Metal
Choosing the type of precious metal to invest in is essential when building a precious metals investment portfolio. The most commonly traded precious metals are gold, silver, platinum, and palladium. Each metal has unique properties, uses, and market conditions that can impact its value and suitability as an investment.
Gold is the most well-known precious metal and has been used as a store of value and currency for thousands of years. It is highly valued for its rarity, durability, and beauty. Gold is often seen as a safe-haven asset that can protect against inflation, currency fluctuations, and geopolitical risks. It is widely traded and relatively easy to buy due to its availability, standard sizing in troy ounces, and use in currency and numismatic coins.
Silver is another commonly traded precious metal. It is highly valued for its industrial uses, including in electronics, solar panels, and medical equipment. Silver is a more affordable alternative to gold. For instance, as of April 24, 2023, you can invest in silver at $25.13 per troy ounce, while a troy ounce of gold costs $1,984.13. Silver is historically more volatile than gold because its value relies on consumer industries such as electronics and medicine.
Platinum is a dense and durable metal highly valued for its industrial uses, particularly in the automotive industry. Although platinum has been lower than the price of gold for over a decade, platinum is a good choice for investors looking for a long-term investment because of its high industrial demand, limited supply, and non-correlation with other asset classes.
Palladium is another rare and durable metal highly valued for industrial use, particularly in catalytic car converters. It is the most volatile of the four precious metals and can be more challenging to buy and sell due to its smaller market. Palladium is often seen as a high-risk, high-reward investment.
Decide on the Form of Investment
When investing in precious metals, there are several forms of investment to consider. Each investment type has pros and cons, and choosing the right one depends on your investment goals, risk tolerance, and personal preferences. The most common forms of investment in physical metals are bullion, numismatic coins, and jewelry.
Bullion refers to physical gold, silver, platinum, or palladium in the form of coins and bars produced by a government or a private mint. Bullion is valued based on the weight and purity of the metal and is often the most cost-effective way to invest in precious metals.
Bullion can be stored at home, in a bank safe deposit box, or with a precious metals storage company that requires a storage fee. Buying and selling bullion is easy due to its standardized markings and value. For example, gold bars are marked with their troy ounce weight, purity, and mint, allowing investors to quickly determine their worth for investment.
Numismatic coins are rare and valuable coins collectors seek for their historical significance, rarity, and condition and are graded on a specialized scale. Numismatic coins can be made of gold, silver, platinum, or palladium and have a high premium over their metal content.
They are often sold through specialized dealers or auction houses and can be more challenging to buy and sell than bullion. Numismatic coins can be a good investment for collectors, but they are not recommended for investors primarily interested in the metal content.
Jewelry made of gold, silver, platinum, or palladium can also be a form of investment in precious metals. The value of the jewelry is based on the metal content and the craftsmanship.
Place Your Order
When you are ready to invest in physical bullion, you can place an order with a reputable dealer like AU Precious Metals. We offer in-person and remote services for investing in precious metals, using wire transfers and secure postal services for a convenient investment process.
Our team will ensure a hassle-free buying process and that you receive your bullion assets as quickly as possible.
Monitor Your Investment
After investing in precious metals, monitor your investment to ensure it aligns with your financial goals. This lets you know how your assets are performing and make adjustments if needed. Consider the following tips for monitoring your precious metal investments:
Keep Track of Market Trends
Precious metals prices can be volatile. Staying informed about market trends and news that may affect the price of your investment is ideal for knowing how your assets are adding to your portfolio. Follow industry news and subscribe to financial publications, such as The Wall Street Journal or Fortune Business Insights, that cover the precious metals market. These can alert you to potential investment opportunities you can discuss with your precious metal dealer at AU Precious Metals.
Monitor Your Investment Performance
Regularly check the current market value of your holdings. You can also use historical price charts to track the performance of your investments over time. For example, over the last year, gold has risen from $1,702.00 per troy ounce on September 2, 2022, to $1,979.00 on April 21, 2023.
Re-Evaluate Your Investment Goals
If your financial goals or circumstances change, review your portfolio to ensure your precious metals investments strategy aligns with your needs. For example, if you invested in silver at a peak value period, but it is declining in the markets, you may sell these assets and re-invest them in gold for more stable performance. Or, if you come into more capital and are looking for a potentially lucrative investment, you might consider adding palladium or platinum to your portfolio.
Consider Rebalancing Your Portfolio
Rebalancing your portfolio involves adjusting the proportion of your assets invested in different types of investments to maintain your desired level of risk and return. For example, you invest in 50% platinum, 20% gold, and 30% silver. Platinum has a high return, but if you are looking for a less volatile asset, you may rebalance your portfolio with 10% platinum, 70% gold, and 20% silver for less risk.
Purchase Precious Metals Today
Consider investing in precious metals if you want a reliable investment option to diversify your portfolio and grow your wealth. At AU Precious Metals, we can help you determine which precious metal assets fit best with your wealth management strategy, including stable long-term growth or high-risk, high-profit options.
Our team can also help you consider different precious metal assets to assess which is easiest to store or trade in for cash in the future. Whether you prefer precious metal bars or coins, we can provide the knowledge and resources necessary to help you make the best investment decision for your portfolio.
Contact us today or stop by our Novi or Rochester, Michigan, locations to learn how to get started in precious metal investing.