In the last few years, the idea of investing in precious metals has received a great deal of attention. This is certainly not a new concept. Throughout history, gold has represented wealth and prosperity throughout civilizations around the world. From early currency to jewelry, gold has embodied affluence. Although society has advanced significantly over the course of history, one thing has remained constant and it is the ability of precious metals to serve as a safe haven for wealth.
Types of Precious Metals
Although gold is certainly the most popular of the precious metals and is frequently covered in the media, it is certainly not the only precious metal available for investment purposes. There are also three other important metals that can serve as an excellent addition to your portfolio as well. Silver, palladium, and platinum have all witnessed price increases during the last few years. This has primarily been due to a rapid rise in global demand. Although many people tend to associate precious metals with coins and jewelry, much of the demand for these particular metals is linked to their industrial uses. As both India and China have emerged as important world commerce participants, the demand for these metals for use in industry has risen rapidly.
Gold plays a critical role in the electronics industry and serves as an integral component in many higher technology applications. Not only does gold act as an excellent electrical conductor, it is also chemically stable, corrosion-resistant, and serves as an outstanding heat shield. As a result, gold has become not only an important element in the manufacturing of jewelry, but is also frequently used in a variety of industrial applications.
Platinum also has many important uses in industry. For instance, this precious metal can be found in automotive parts, computers and medical equipment. Like gold, it is also commonly used in jewelry, making this precious metal a highly sought after commodity.
Palladium is a critical element used in catalytic converters. This is primarily due to its ability to capably withstand high temperatures and oxidation. In addition, it also possesses excellent conductive properties. In some instances, palladium is actually used in electronics rather than gold. This precious metal is also used in a number of other applications that include photo processing, raw material processing, fuel cells and water purification. Furthermore, it is used in the refining of oil and natural gas.
Silver has served as a popular commodity for both currency and jewelry throughout history. As technology has become more advanced, additional uses of silver have also been discovered. Today, as is the case with other precious metals, silver is frequently used in a number of technological and industrial applications, including in the medical field.
Due to the many ways in which precious metals are utilized, the demand for each of these four commodities has risen sharply in the last few years. Investors who are looking for investment vehicles that will allow them to tap into options that represent excellent potential for long-term growth will find that precious metals fit the bill nicely.
Why Invest in Precious Metals
Among the most common reasons many people opt to invest in precious metals is a rising concern regarding future inflation. Around the world, commodity prices have continued to escalate. Holding precious metals is one way in which an investor is able to diversify risk during uncertain economic times. Investing in precious metals can also serve as an excellent hedge when currency values are threatened by inflation. For many people, purchasing precious metals provides a safe haven.
Capital conservation is certainly a strong reason to consider the purchase of precious metals when there are worries regarding currency decline. By purchasing precious metals, you are able to take advantage of the ability to protect your own money. In many ways, the purchase of precious metals is comparable to purchasing a homeowner’s policy. While it would certainly be hoped that your home would never catch fire, in the event it does, an insurance policy will ensure that you receive the full value of your home. The same philosophy can be applied to the purchase of precious metals. By staying on top of the market value of precious metals and the health of the economy, you will be able to protect your current assets. Even during times when cash declines in value, precious metals still retain their value. This makes precious metals an ideal investment tool for anyone who is interested in protecting their assets.
Capital appreciation is another important reason to consider the purchase of precious metals. Although precious metals certainly serve as an excellent hedge against inflation, they also make an ideal vehicle for growing your wealth. During times the rates of precious metals increase rapidly over just a few years, it is possible to actually make a profit from your investment.
The History of Precious Metals Prices
Gold prices recently reached around $1,600 per ounce. During the last few years, the price of gold has demonstrated an uptrend that has remained fairly consistent. At the end of 2012, palladium sold for $640 per ounce. Within just a few weeks, the price of this precious metal jumped to $741 per ounce amid supply concerns. It is anticipated that the price of palladium will continue to rise in the coming months.
The price of platinum has also continued to rise steadily. Reports have indicated that the price of this precious metal could easily witness a spike in coming months due to limited supplies from South Africa, a major supplier of platinum. In fact, earlier in the year, the price of platinum actually surpassed the price of gold. Meanwhile, the price of silver is hovering just under $30 per ounce.
Although there is a certain amount of volatility to be expected in any type of investment, during the last few years, the price of precious metals has continued to exhibit an increasingly upward trend. Gold has increased by 119 percent over its long-term average. At the same time, investors have seen an 87 percent increase in the long-term average of silver, while platinum has risen 67 percent. The real standout in precious metals has been palladium, which has increased by 125 percent.
How to Invest in Precious Metals
Given the price increases witnessed in the four major precious metals markets within just the last few years, it is clearly apparent that investing in precious metals provides not only the opportunity to protect your wealth against inflation but also grow your wealth for the future.
Today, it is easier than ever to invest in a variety of precious metals. Whether you are a new investor interested in beginning a portfolio or you are interested in adding these commodities to your existing portfolio, there are many options available. Investors today are able to choose from a wide variety of different types of precious metals that include gold and silver coins and even platinum and palladium.
One of the biggest concerns many new investors have regarding the purchase of precious metals is whether their budget will be able to accommodate such an investment. One of the excellent benefits of purchasing precious metals is that there are varying weights and sizes of different precious metals are available, making it possible for investors to choose an option that easily accommodates their investment budget.
Getting Started Investing
There is little doubt that the demand for precious metals is increasing. Prior to purchasing precious metals for your own investment portfolio, it is important to conduct your own research. Take the time to explore various sources for purchasing precious metals and find a source that is known and respected.
One of the most important elements to consider when selecting a precious metals dealer is to find a company that will stand behind their products. When you are investing in gold, silver, or any other precious metal, it is imperative that you have complete confidence. A reputable dealer will be happy to provide you with a guarantee. Finally, consider the types of products offered. If you are interested in diversifying your portfolio with a wide array of precious metals, including various types of coins and bars, this can be quite important.
Among the most common questions that many people have when they first approach the idea of investing in precious metals is how much they should invest. This is entirely a personal decision that should be based on a careful analysis of your current financial situation, including your total assets, as well as your own tolerance for risk. If you are planning to invest in precious metals in order to fund a retirement account, it is also important to consider your current age and the age at which you plan to retire.
Whether you are interested in growing long-term wealth to fund your retirement goals or you are interested in protect your wealth amid economic concerns, investing in precious metals can help you to reach your financial goals.