Tactics when Investing in Precious Metals in 2022

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 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.

While global demand for critical minerals is increasing, global supply is uncertain due to the market, technical and commercial risks of critical minerals projects.

The need for robust supply chains has been highlighted by the COVID-19 pandemic. Countries are increasingly seeking access to reliable, secure and resilient supplies of the critical minerals they need. Australia’s large critical minerals reserves, technical expertise and track record as a reliable and responsible supplier mean the sector can respond to market demand.

This strategy sets out a long-term plan to leverage growing global demand and develop a thriving and durable Australian critical minerals sector – one that contributes to the national security and economic prosperity of Australia and the Indo-Pacific region.

What are Precious Metals?

The best known precious metals are the coinage metals, which are gold and silver. Although both have industrial uses, they are better known for their uses in artjewelry, and coinage. Other precious metals include the platinum group metals: rutheniumrhodiumpalladiumosmiumiridium, and platinum, of which platinum is the most widely traded. The demand for precious metals is driven not only by their practical use but also by their role as investments and a store of value. Historically, precious metals have commanded much higher prices than common industrial 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. In other words, you should invest in physical metal rather than paper contracts.

When investing in precious metals, it is crucial to take delivery of the physical metal rather than holding an investment contract. This means that you must purchase the metal directly from its issuer rather than buying a derivative product based on the price of the metal. Derivatives products may fluctuate wildly if there is a change in the underlying asset. Physical metal is less likely to experience such volatility.

 

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. In other words, you should invest in physical metal rather than paper contracts.

When investing in precious metals, it is crucial to take delivery of the physical metal rather than holding an investment contract. This means that you must purchase the metal directly from its issuer rather than buying a derivative product based on the price of the metal. Derivatives products may fluctuate wildly if there is a change in the underlying asset. Physical metal is less likely to experience such volatility.

When choosing where to store your precious metal holdings, consider whether you’d prefer a bank vault or somewhere else. A bank safe deposit box is convenient and offers additional security, but you’ll pay a premium. Other options include an online storage provider, a safe-deposit box, or even keeping some of your precious metals in a friend’s home.

Sell When Prices Are High

There’s no guarantee that prices will always go up; sometimes they fall instead. However, if you’re able to buy at the top of the market and hold until prices drop, you’ll make a profit. Conversely, if you wait too long to sell, you could miss out on potential gains. Be careful not to let emotions cloud your judgement regarding when to cash out. Think rationally about how much the asset is worth compared to other things you could be spending that money on.

 

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. For instance, you might choose to hold 10% of your total fund holdings in precious metals while the remaining 90% remain invested elsewhere.

Look at the Market Cap of Your Portfolio Investments

Precious metals are considered one of the safest asset classes out there. However, this doesn’t mean that you don’t need insurance against losses. Having a large percentage of your overall portfolio made up of precious metals can cause problems if you lose money due to poor performance. In order to protect yourself, consider using different strategies to reduce risk in your portfolio.

For example, if you’re allocated 15% of your precious metals for shorting, you could use that allocation to hedge against possible future price rises by selling short. On the other hand though, another strategy would be to sell when prices fall below your desired price point.

Keep Track of the Price Movement

Since precious metals are a very volatile asset class, it pays to keep track of prices over time. A good example of this is to monitor the price movement of gold vs. the US dollar. While the US dollar has been rising since its inception, the price of gold hasn’t moved much since 1970. As a result, many people think that gold is no longer valuable because the US dollar has become stronger than gold.

However, there are plenty of reasons why gold prices haven’t risen. First off, the price fluctuations are caused by the Federal Reserve increasing the supply of dollars via quantitative easing measures. Second, gold miners use the higher price of gold to increase profits. Lastly, gold buyers may take advantage of the high price of gold and buy more than they had planned on buying.

 

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. They’re only interested in making as much money as possible, which means that you’re likely to pay more than necessary for any goods or services.

Likewise, avoid buying directly from individuals who claim to own precious metal mines. These claims are hard to verify and thus, there’s no way to know whether the person owns said mine or not. It’s better to deal with a reputable dealer who specializes in mining.

Reputable Dealers

You’ll want to look into the reputation of a dealer before purchasing any products. This will help ensure that you get the best quality product for the lowest cost. Be aware that some dealers specialize in fake silver coins, while others specialize in real bullion. When considering where to invest, make sure that you do your research well so that you end up getting what you really want.

It’s important to buy from reputable local dealers who will let you examine the metal you’re buying or from online sellers with lower prices because they don’t have overhead expenses to worry about. Here, at Gold Bullion Australia’s Redcliffe office, we offer a wide range of gold bars and coins from world famous brands like Krugerrand, Britannia, and Perth Mint. We have a wide variety of gold & silver products available for you to choose from.

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.

Investing in precious metal

 

At Private Vaults Australia, we offer safe deposit box services and storage solutions that ensure the reliable and safe storage of your gold and silver bullion, and other precious metals. We are a ‘One Stop Shop’ for all your buying, selling & storage needs.

If you need secure storage for your precious metals, then contact us today!

For more info on tactics for investing in precious metals in 2022, contact PVA or read the PVA blog for more interesting news, tips and ideas to guide you.

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peter-hobson-private-vaults

Peter Hobson

My background involves the ownership of many businesses including owning and running multiple Chiropractic offices but mainly focused in Nerang on the Gold Coast for 30 Years.

I have a passion for accumulating and holding Bullion and have done so for many years. My extensive Business skills and Bullion knowledge makes it easy to assist others buying, selling and storing their Bullion.

Peter and Cassie work together to assist anyone from the experienced Bullion Investors to the complete novice. They are here to answer any questions to help you.

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