If you’re looking for an effective way to diversify your investment portfolio and protect yourself from stock market crashes, you might be wondering about precious metals.
Depending on which metal you choose to invest in, your precious metals investment could be a safe investment or a potentially risky one. Like most other types of investments, there are a bunch of different factors to consider.
There are also various ways you can obtain precious metals for investment purposes. While owning and storing the physical metal is always an option, alternative methods may be better suited for your investment goals.
So, are precious metals a good investment? Let’s find out!
What Are Precious Metals Used for?
Physical metal has been used for a wide variety of applications throughout history. In the case of precious metals, decorative uses are fairly common, although there are often practical uses for these physical assets as well.
Gold—which is arguably the most well-known precious metal—is often used to make jewelry, art, or made into gold coins. Similarly, silver is also available in the form of silver coins, bars, and other types of bullion, as well as jewelry and tableware.
Platinum, another precious metal, is often used in the automotive industry to create car parts. It is also used to make medical equipment and jewelry. Lastly, palladium is a precious industrial metal primarily used in catalytic converters.
The Different Ways to Invest in Precious Metals
There are a few different ways that one can start investing in precious metals. Since these options remain essentially the same across different types of metals, let’s just simplify things and focus on gold.
The most common way to invest in gold is by physically purchasing gold bullion (such as gold bars or coins). You can also purchase gold jewelry, although—since the value of gold jewelry is often heavily reliant on the craftsmanship of the piece itself—this isn’t usually the best route to take.
If you’d prefer to take a different approach, you could also invest via a mutual fund or through a precious metals ETF. Investing in gold ETFs (exchange-traded funds) doesn’t give you direct access to the gold itself, but it does make it easy to track the price of gold in your portfolio alongside your stock market trades.
The Pros of Investing in Precious Metals
You’ll enjoy a few different benefits if you decide to make precious metal investments, although the exact benefits will vary depending on the particular metal you invest in.
The supply of gold and demand for gold are two of the main factors that influence gold prices. Unlike stocks and most forms of currency, gold prices are relatively independent of the market, making many consider it to be a safe-haven asset during economic downturns.
The same is true for silver prices, as well as the prices of other precious metals. Each and every precious metal investment can retain (or even gain) value as the markets take a turn for the worse, essentially acting as a hedge against inflation,
Beyond limited ties to the market, precious metals can also serve as one of the investment decisions that enables you to diversify your portfolio. By adding precious metals to your portfolio, you can help protect it from the market.
The Cons of Investing in Precious Metals
Of course, there are a few cons to consider before investing in precious metals. Like any other type of investment, there’s no guarantee that your precious metals will hold their value. Unlike stocks or bonds, precious metals don’t generate interest, which means you’ll be relying on price appreciation to make a profit.
Also, it’s worth noting that you will be spending money on storage if you decide to purchase physical metals. Whether you’re storing it at home or in a secure depository, keeping your metals safe will require a bit of funding.
The Best Places to Buy Precious Metals Online
Now that we’ve gone over the pros and cons of precious metals, you’re probably wondering where you can start purchasing them. Below, we’ve gathered three trustworthy online dealers to consider.
Augusta Precious Metals
Augusta Precious Metals is an online precious metals dealer that sells a variety of coins and bullion products. However, its specialty is its Gold IRA, which helps customers start investing for retirement using their precious metal purchases.
Acre Gold is a unique online marketplace that lets customers finance their precious metals purchases. For as little as $50 a month, you can start making payments on gold bullion. Once the entire price has been paid, you can have the gold shipped directly to your home!
Offering free shipping on orders exceeding $199, Jim Bullion is a well-known and respected online precious metals retailer. Offering one-on-one consultations with experts to help you through the selection process (if desired), Jim Bullion’s wide selection of products offers pretty much everything you’ll need on a single platform.
Whether you decide to invest using physical metal or through a precious metals ETF, it’s worth adding precious metals to your portfolio. Not only can this strategy help reduce risk through diversification, but it can also help you limit your market exposure!
Are precious metals a good investment? Well, there are a few drawbacks (such as price fluctuation, storage fees, and insurance costs). However, overall, we think precious metals are an asset type worth investing in. Any type of investment has its drawbacks, but—for precious metals—we think the benefits outweigh the risks.