If you are looking to find a great asset for investments, you can’t go wrong with precious metals. If you’ve been considering making money via a precious metals exchange, you are making a great decision. Since time immemorial, precious metals have been a valuable commodity.
But before you start investing in precious metals, you want to make sure you do things properly.
This can be a costly investment and you want to make sure you make wise decisions so that you can expect great returns in the future.
This informative guide will show you what to know before you invest in precious metals.
What to Know Before You Head to a Precious Metals Exchange
The first thing to do is to make sure you only invest what you are willing to lose — which is a general rule of investing. You will likely have to hold your precious metals for years before you can sell them, so keep this in mind. You also want to invest in a great safe to protect your precious metals.
You also want to look for a great online service for purchasing your precious metals. For beginners, you might like this company.
Once that’s done, here’s what you need to know about investing in precious metals:
You must have a diverse array of precious metals in your portfolio. You want to make sure you have an ample amount of both gold and silver. You may also want to consider other precious metals such as copper, platinum, and palladium.
To decide what precious metals to add to your portfolio, you want to understand what each of them are used for. For example, gold is often used as an alternative form of currency. Banks and governments try to store as much gold bullion as they can. In times of hyperinflation, gold has been used as a trusted form of currency.
Silver is perhaps the most versatile precious metal available. It has been used for a variety of industries and is, therefore, highly liquid and always in demand.
Platinum and Palladium are similar, both used primarily in manufacturing and in the automotive industries. Copper is used often in the medical industry and is generally one of the more affordable precious metals.
2. Keep an Eye on the Price
You should always look at a gold exchange, silver exchange, etc. to check the latest price of the precious metal. Prices will fluctuate so you have to buy when you can afford to do so.
As we mentioned in the introduction, you have to be patient when investing in precious metals. Don’t expect the price to jump up immediately after you buy your precious metals. You might also have to wait years for it to rise at all.
The value of a precious metal is based upon its spot price, weight, and fineness. The spot price refers to the market value per troy ounce of the precious metal. The weight’s value is determined by the spot prices multiplied by the weight of the metal you own. The fineness refers to the quality of the precious metal (such as 14K vs 18K gold).
3. Bars vs Coins
You have to decide whether you want to purchase bars or coins. Ideally, you should diversify your portfolio and have both. You should do your research to see which type of bullion works best for your needs and what is easier for you to store and purchase.
Generally speaking, bars are more valuable than coins. Bars carry a higher amount of a precious metal. Large companies and institutions are always on the lookout to stack up on as many bars as possible.
However, they are more expensive and more difficult to store for the average investor. For beginners, they are usually outside the desired price range.
Bullion coins also have a lot of importance. These are more affordable and can easily be stored in your safe. These are also in demand from a greater number of avenues. If you own a large collection of bullion coins, you can not only sell them to industries but also to collectors as well as existing precious metals exchanges.
4. Consider Your Risk Tolerance
Investors all have different levels of risk tolerance. This refers to how much they are going to risk — in terms of how much they are going to spend and what they will buy. For example, you may be willing to invest $1,000 in a safer precious metal such as silver. Or $5,000 in a volatile precious metal such as platinum.
You want to consider what is best for you. For example, are you willing to reach out to industries that require platinum? Are you able to reach out to large institutions that are seeking to stock up on thousands of gold bars? Or do you prefer collecting as many bullion coins as possible and then selling them to collectors or to a precious metals exchange?
You want to consider how long you are willing to hold onto your precious metals. Copper might be a great investment because of its general affordability. But it might be several years until a high demand for copper arises. You must ask yourself if you are willing to hold onto a precious metal for several years.
5. This Is Not a Hobby, It’s an Investment
There is something exciting about checking your safe every now and then to look at your collection of precious metals. But if you are serious about investing in precious metals, you cannot treat it as an ordinary hobby.
You have to keep written records of all of your precious metals purchases. Keep information on when you purchased it, the type of metal, the cost upon purchase, etc.
You need to make sure you clean your metals regularly so that they don’t get tarnished and lose their value. You want to always do your research on the market value of your precious metals so that you know when is the right time to sell.
Make Your Investment
Now that you know how to invest in precious metals, you are ready to head to a precious metals exchange and start buying precious metals. Make sure to share this guide with anyone else interested in investing in these valuable assets.
Read more interesting facts on precious metals and more on our website!