If you want to invest in gold, silver, palladium and platinum, you might have been watching precious metals as their prices keep on plunging. Silver and gold are the most plunging of precious metals and firmly in the heart of bear market territory. In fact, by the end of 2013 silver had fallen by 43 percent and counting with gold losing ground by 27 percent. The current downward slide in gold and silver prices has shown investors the saying that precious metals are extremely volatile holds a lot of water. A 50 percent plunge in one year is possible.
Nonetheless, you will find so many great reasons why investing in gold and silver or other precious metals are beneficial, especially for diversified portfolios. With precious metals you have one of the most important cushions against the fiery hand of inflation as well as a good insurance against political and financial disasters. As a result of their huge industrial applications, precious metals wield intrinsic worth.
Low bonds and stocks connection
Precious metals are also worth investing due to their low connection to bonds and stocks. In fact, a small investment in a portfolio easily reduces risk and volatility. Nonetheless, gold and silver are always at the top of everyone’s investment, but the well informed investor knows there are many other precious metals.
Investing in metals
Investing in precious metals can be done in a number of ways, such as speculative and aggressive or conservative. In addition, a precious metal is the perfect vehicle for a better income or financial growth or a greater cushion against economic uncertainties. All these are things worth remembering before you invest in them, but only two options exist; paper and physical investing in precious metals. This simply means possessing the metal physically or holding a paper that represents the precious metal you own.
Bars and coins are great for investors who believe in physically holding the metals and have a safe place to store them. It is an option many investors like, especially those who think there will be a disaster soon. Nonetheless, bullion exposes you to theft and loss, it is cumbersome and illiquid.
With a certificate, a precious metal investor enjoys every splendor of owning gold physically without the burden of storage and transportation. But, certificates are questionable during financial disasters and are still just paper.
ETFs (Exchange Traded Funds)
This is a very liquid and suitable way of selling and buying precious metals. These ETFs, such as iShare Silver Trust and SPDR Gold Shares track the precious metal prices with , allowing an investor to magnify his exposure to changes in prices by a number of times.
Mutual funds and mining stocks
Through this method, the investor is given a chance to indirectly invest in precious metals. The precious metals miners have their shares put under the test of price movements, although they do not normally follow the movement of precious metals themselves. To invest in such, find funds managed by entities with low expenses and great performance records.
Futures and options market
This market is a source of greater leverage and marked liquidity for investors interested on betting big time on precious metals. However, the futures market is one to trend on carefully due to its riskier nature while being the greatest potential for huge losses or massive profits.