Are precious metals the next step in diversifying your investment portfolio? Seasoned investors have long been known for maintaining a portion of their holdings in resources like gold and silver, and maybe you’re considering following suit.
Investing in precious metals takes on two primary forms: physical ownership and securities. Let’s unpack the pros and cons of these two forms of investment and find what’s best for you.
Many opt for bullion (AKA physical metal ownership) when they explore investing in precious metals. This is for a variety of reasons, that will be explained shortly.
The most common investment of precious metals is gold. The king of commodities, gold is as traditional as it is effective, avoiding the inflation that plagues the US dollar. Gold also has a high buy-in, typically sitting at around $2,000 per ounce
Other popular metals include silver, copper, platinum, palladium, and more, which all have their specific differences ranging from buy-in price to mining supply.
The biggest pro for bullion investment is in the safe, tangible nature of owning commodities like gold. It’s internationally accepted and easy to buy at various stores, especially for those looking for some sale items.
There are a few important downsides to physically owning precious metals like gold and silver. It can be both risky and cost-intensive, as it’s difficult to safely store and transport large quantities of gold.
It’s also important to consider the lack of cash flow involved with a precious metal investment. You should be prepared to trade off cash flow for the security that precious metals include avoiding the rollercoaster of the stock market.
Investing in Precious Metals
The other major investment option is through securities such as mutual funds, stocks, and exchange-traded funds (ETFs). While you don’t physically see the precious metals, you’re still able to manually take control of your portfolio with these options.
That being said, many who aren’t familiar with maining stock value wisely opt for options such as actively managed hedge funds.
The pros of security investment complement the cons of bullion. Funds can be made immediately liquid, there’s no transportation hassle when buying or selling, and you can invest an amount of money into it.
ETF and fund investment are the easiest way to buy and sell your precious metals, such as gold and silver.
For those who absolutely need a physical representation of their metals, this option probably won’t work. You don’t get to own and actively store your gold with this option in the way that physical investment entails.
A rare possibility that’s important to point out involves the reliance on this third-party mining company and fund. If they happened to go out of business, you’d be left high and dry in a way that physical investment would never allow.
Begin Investing Today!
We hope this article was a great resource for your investment education. Whether you’re looking to purchase copper or gold today, or you’re looking to learn more about the process, we’d love to help.
For more great information and tips concerning investing in precious metals, check out the rest of our blog!