Mar 28 2013
Investing in precious metals is an opportunity to safeguard your wealth at the very least. Looking back at the performance of these commodities over the last 10 to 12 years, you can also see that they present excellent opportunities for large, long-term and short-term gains.
Why Invest in Gold and Silver
If the price-performance of precious metal assets like silver and gold is not enough to convince you to invest, consider some of the underlying factors that move people toward these investments. There are many good reasons to keep precious metal in your portfolio. The amount of space that you devote to them is up to you. However, most of the major investment firms have increased their exposure to gold, silver, platinum and other such commodities over the last few years.
• There is a psychological underpinning to investment in these assets that not only motivates you to buy them but also supports their liquidity. In other words, you can count on people wanting to buy your precious metals at any time.
People have been using these metals for a long time as sources of value. Gold and silver were the first currencies. For thousands of years, right up until the last century, virtually all currencies were tied to the value of gold or silver somehow. These factors give precious metal buyers and sellers confidence in their investments.
• Inflation is another issue that brings many people into this market. Some of these newcomers are experienced traders who are looking for a refuge for their wealth. Others are newly inspired buyers who have seen the writing on the wall with regard to the economy and the state of the currency floating around in increasing quantities.
Over the last five or six years, the US government has essentially printed money with its various programs to support the economy. However people may feel about these measures, there is no doubt that they have spurred inflation. Food prices and gas prices are the often-discounted evidence of this. The price of gold and silver has nearly tripled since early 2007. If you look at gas prices, you will see that it has outpaced them.
• If you are really concerned about the economy and think that the world is headed for some dire times, then these assets are going to be particularly attractive to you. As international interests begin to steal people’s savings in countries like Cyprus, some investors think that currency could go belly up. Should that happen, physical precious metal assets would be the best sources of wealth.
How to Invest
If you want to invest in precious metals, you have several options. The obvious method of investment is the purchase of physical quantities of your chosen commodity in this area. However, you can also invest indirectly in these assets by buying mining stocks. Additionally, many experienced investors are recommending exchange-traded funds (ETFs).
• Physical investment is beneficial because it puts the wealth in your control. There is a relative certainty behind the value of these assets, especially today. However, there are some drawbacks, as well. Physical gold assets will sell for values above spot price, which might make you uncomfortable. Also, when you buy precious metal in physical form, you become responsible for the storage and maintenance of these assets. This is a responsibility foreign to most stock investors.
• Investing in mines can be lucrative. This method also allows you to use your already-acquired trading skills in research to further your investments. However, there are some unknowns that make this investment track chancy. For instance, many mines are located in countries with difficult social and political situations that are very fluid. Stock values can plummet suddenly for truly undiscoverable issues.
• ETFs are considered by some to be the best option in this regard. Renowned investors like Jim Rogers use them almost to the exclusion of other forms of precious metal investment. These options allow you to acquire assets with values near spot price without actually having to own anything concrete.
Most investors in this corner of the market agree on one thing, at least. You should invest in precious metals in some way. These assets are perfect for the present economy. At minimum, they can provide protection for your wealth while currencies wither. They have already helped make many investors rich, if they were wise enough to get in the market five or even 10 years ago. These metals make excellent anchors for your personal finances such as your savings and checking account, whether you buy physical quantities or not.