Tactics when Investing in Precious Metals
In times of economic uncertainty, investors often rely on low-risk investments to secure their wealth. You’ll often find people veering away from riskier ventures like stocks and bonds and going for “safe-haven assets” like precious metals. The trick to successfully incorporating assets such as gold, silver, palladium, and platinum into your portfolio is by applying winning tactics when investing in precious metals. Today, we’ll look into useful tips and tricks that will help you when buying precious metals.
Go for Beneficial Ownership
In the past, the only way to invest in precious metals was by purchasing them physically in the form of coins, bars, or jewellery. Today, however, investors have the option to buy certificates, exchange-traded funds (ETFs) traded by metals, close-ended bullion funds, futures funds, and the like which makes it easier for people to add gold to their portfolio.
The problem with futures, ETFs, and certificates is that they are not backed by the commodity they represent so they cannot be redeemed for physical shares. It is important to invest in physical precious metals which grant direct ownership. If you want to invest in paper precious metals as well, be sure to invest in fully allocated precious metals to avoid counterparty risks.
Understand the Risks Associated with Precious Metals
While precious metals come with a certain degree of security as investment assets, they are still prone to their own set of risks. This includes price volatility linked with economic stability, depletion of mineable metals during periods of high demand, and the risk of loss, theft, and/or confiscation.
Knowing these risks allows you to determine when to purchase, sell and store precious metals securely.
Always Have an Investment Plan
It’s important to properly plan when buying precious metals. You should have a proper tactic that allows you to hedge against global economic instability and the volatility of the financial market. Likewise, you should also employ a proper investment ratio that allows for diversification of your assets.
Buy from the Right Dealer
Buying from a reputable dealer ensures that you get the best value for money. Avoid TV dealers or gold shows since the metals they offer often come at a high premium, high margin, and dubious investment value.
It’s important to go for reputable local dealers who will allow you to examine the metal you are buying or from online sellers who can offer lower prices since they don’t have overhead costs to worry about.
Find a Secure Place to Store Your Precious Metals
When it comes to precious metals, storing them in a reputable storage facility is paramount. Avoid storing your hard earned assets in a home safe or at a bank where they may be stolen, misplaced or confiscated by the government. Therefore it important to choose a non-bank safe deposit box facility that can hold your investments securely.
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