What are precious metals? They are rare metals that have a high economic value due to various factors. Some of these factors include:
- Hedge against Inflation
- Industrial Usage
- Store of value
United States Geological Survey (USGS) states that the precious metal production rate in the U.S amounted to 1,195.6 tons in 2020. Gold, silver, and platinum are the most well-known metals. These metals don’t corrode or tarnish naturally. These precious metals have been used for jewelry and currency over time. More recently, metals like gold have been used in devices like iPhones.
A lot of financial advisors recommend diversifying your portfolio. You can do this by spreading your investment across an array of commodities. This will help you to minimize risk in case one investment drops in value. That’s why it’s beneficial to have additional investments that are not as affected by the market.
Investing in Precious Metals: 2022 Guide
Apart from providing a hard asset, precious metals are also an ideal investment. One that has historically withstood economic uncertainty. Their rarity has been treasured for centuries as a monetary device and sign of wealth.
You may be knowledgeable of the fact that investing in precious metals is a great option. But knowing where to start can get overwhelming, especially for beginners. This guide is designed to give you an overview of some of the metals. Let’s get to it.
Investing in Diamond
The constant fluctuation of the economy has caused some people to hold onto their savings. That’s because they would rather wait until they find a substantial investment than buy the dip. This has led investors to appreciate the value of physical commodities like diamonds.
Before investing in diamonds, however, you must ensure they meet the minimum requirements. Sure, you can use the 4Cs as a guideline. But note that it takes a lot more for diamonds to qualify as a worthy investment. For instance, there must be a combination of characters like the cut, polish, and fluorescence, as well as the way the inclusion is set in the diamond.
You must also consider the way the diamond is oriented in the process and its atomic structure. Is it a type 1A? Or is it a type 2A? Think of its overtone as well as the overall grading.
When investing in this metal, make sure it’s reasonably close to the source price. This will enable you to make a profit when you resell the diamond later on. You should avoid purchasing diamonds from retailers. Purchasing an investment diamond from an expert means buying it closer to the source.
Usually, diamonds are mixed, sorted, cut, and polished. They are then sold, from where they go to two or three diamond dealers. This happens before they’re taken to a jeweler. Thus, you’re better off purchasing the diamond higher up in the supply chain. It helps to eliminate additional profits or costs that get added on.
When talking about investments in precious metals, we can’t afford to forget about fashion investments. And this is all about jewelry. One of the most classic designs and biggest trends of 2022 is the diamond tennis necklace.
Before investing in a piece of jewelry, ensure you buy a high-quality item made with the best material. A tennis necklace is a good investment. But you must test the flexibility of the bracelet by holding it open and upside down before purchasing. This is meant to ensure that the bracelet wouldn’t collapse.
Loose diamonds are another good option for investments as well. Make sure to consider 4’Cs before investing.
Guide to Investing in Gold
Gold is, without a doubt, the most well-known item of value in the world. Throughout history, this precious metal has played countless roles, from currency to essential materials in electronics to jewelry. According to investors, gold continues to maintain its allure as a one-of-a-kind asset. It provides alternatives to conventional stock and bond markets.
Now, there are several primary ways in which to own gold. This is through:
- Gold jewelry
- Gold futures
- Gold mining stocks
- Physical gold coins or bars
- Gold ETFs and Trusts. ETFs are exchange-traded funds that give you exposure to gold. This happens without an investor having to directly buy, store and resell it. Now, the gold ETFs operate as trusts, which hold physical gold and give shares.
Buying physical gold coins or bars is the most satisfying way to own gold. It enables you to experience the beauty of gold and feel how heavy and durable it is. The challenge with owning physical gold is figuring out how to keep it safe.
Many investors store them in their homes or in a safe deposit box in a bank. Alternatively, you can pay a custodian or depository to store it for you.
The difference between gold bars and coins is in their shape and weight. The bars get minted into heavier weights. As an investor, consider the percentage of gold in the piece you’re purchasing.
When buying from a dealer, you will pay a premium over the spot price of gold. The premium typically ranges from 1% to 5%, which represents the handling cost and dealer’s profit. During the periods when the demand for physical gold is high, the coins can sell for a premium of 10%.
Gold ETFs are the most convenient way to purchase gold. They are bought and sold through a broker on a commission-free basis. Note that an ETF is a public, pooled, and indirect investment.
Remember that an investment in gold ETF Trust is a representation of a fractional interest in the trust asset. The gold trusts also own physical gold, which is owned by the custodian. The trusts have annual expense ratios of 0.18% to 0.4%. This covers management fees, including some administrative costs.
Guide to Investing in Silver
Compared to gold, silver offers investors a very different opportunity. While gold provides a mix of short and long-term gains, silver is more speculative. It also has greater price volatility.
Despite this, silver is a great choice of investment. It’s much cheaper compared to other precious metals. This makes it ideal for new investors. It’s also a good idea if you want an extra feather in the cap of your investment.
Whether you want to gain a return or make gradual investments, you have a lot to gain with silver. According to Bullion Exchanges’ guide to investing in silver, silver stockpiles are affordable and are expected to reach the equivalent of gold resources in the future.
While big investors may know the ropes, new investors are advised to work with a reputable service. You should do this up to the point when you have learned the ins and outs of the market. But if you choose to get into the investment of silver on your own, here’s what to do:
- Learn the ways of recognizing fake silver
- Stay updated with silver price fluctuations
- Come up with a maximum percentage for the silver holdings
- Get a reputable dealer. One who can serve you without any delay
- Physical silver has better returns on investment. So choose it over paper silver.
- Learn about the spot price of silver and remember that the price keeps fluctuating
Guide to Investing in Platinum
Platinum is used in the industrial and manufacturing markets, especially in vehicle pollution control devices. As the global economy rebounds from the pandemic, the price of platinum is likely to rebound. That’s considering that the metal is used in manufacturing.
This metal also has a future in the renewable energy market. As an investment, it’s used in various ways, such as in hedging and speculating.
Platinum investment can take various forms, and each form comes with different costs as well as risks that must be considered. However, platinum’s range of bullion investments is more limited compared to gold or silver.
Compared to other metals like gold, few people consider investing in platinum. This is despite the fact that silver offers a unique investment with a solid case to consider. This metal is everywhere in modern life despite being rarer than gold.
Identifying your goals is the first step toward any investment. It helps you to determine the type of investment options that will help you achieve your needs. Once you realize your areas of interest, research and ask an expert some questions for better understanding; check the diamond quality and price before investing. Consider gold ETFs and bonds rather than jewelry. For silver, be aware of fake silvers and price fluctuations.