The Difference When Investing in Precious Metals 5.00/5 (100.00%) 1 vote

There are a lot of questions being asked right now about the precious metals market and other investment markets in general. With the economy still mired in an extremely unstable cycle, it is very difficult to predict which way any investments might go in the short-term future. However, investing in precious metals can be treated a lot differently than investing in the stock market. That’s one of the reasons that it has drawn so much interest.

Any time an individual invests in the stock market, he or she is doing a lot of trusting. They are trusting that the value of the company is not being misrepresented and that they are going to be paid earnings on time. The same is true of people investing in government bonds.

They are relying upon the government to pay them back on time. However, these things aren’t always automatic. They are not events that are guaranteed to occur.

For example, if a business makes a number of bad strategic decisions, it could go under and leave its stock entirely without value. That is a risk that stockholders are taking. On the other hand, if politicians opt to defund their own government or fail to raise its borrowing limit, they could cause the government to default on bonds. This means that buyers would not be paid back, at least not on time. That’s an outcome that would significantly challenge the faith that people have in the United States economy and currency.

Precious metals, on the other hand, contrast nicely with those situations. That’s why investing in precious metals is so popular during difficult economic times.

The Difference When Investing in Precious Metals

With precious metals, the physical value of the metal serves as somewhat of a floor for the value of the investment. That means that it cannot be expected to drop below it. While a company can be valued at nothing and a government bond can fail to be paid, precious metals will always hold at least some value. As a result, investing in precious metals provides more security. This is why it is viewed as a good investment in order to diversify the portfolio.

In addition, since people know that precious metals have that reputation, they often rush to begin investing in precious metals when the economy is doing poorly or the stock market is being sold off in a hurry. As a result, when they begin investing in precious metals in large numbers, it drives the value up significantly. For that very reason, everyone’s prediction comes true and precious metals increase in value.

Anyone concerned about the economy or the political spectrum might do well to begin investing in precious metals if their predictions prove accurate.

Which Precious Metals Are Best?

After deciding to begin investing in precious metals, the next question that must be answered is which precious metal to buy. The options are gold, silver, platinum and palladium.

Gold is typically viewed as the investor’s metal, with almost all of its value derived from its status as a monetary symbol and a form of jewelry. Platinum is perceived as the new gold by many people, although it does have at least a handful of industrial uses.

Meanwhile, silver is a more industrial metal that as a result has a much stronger base floor. However, it tends to also move in conjunction with gold, which makes it possible to enjoy the benefits of investing in gold while taking on less risk.

Palladium is like the little brother of platinum, and its pricing varies greatly depending upon the cost of maintenance.

There is also the option to invest in all of the precious metals, for those who want to take a balanced approach.