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Everyone knows precious metals are valuable, but not everyone knows how to use them to their advantage. Buying and investing in precious metals is a strategic financial decision that diversifies your portfolio.
Precious metals are rare chemical elements like gold and silver. Unlike money, you can’t print more precious metals, so their inflation doesn’t impact their intrinsic value. Not every precious metal is a good investment, however. Knowing which precious metals to avoid and buy is essential to making the best financial decision for you.
If you’re a beginner in precious metal investments, doing your research will ensure you know all your options for which metals to invest in, how to invest in them, and how to store them.
What Precious Metals Should You Avoid Investing In?
Metals With Limited Industrial Demand
Industrial demand refers to how much manufacturers need and use a specific metal. For example, manufacturers use silver in electronics, solar panels, and batteries. The more industrial demand a metal has, the more valuable it is.
If a metal has decreasing industrial demand, its value will decrease. It’s best to avoid investing in such metals.
Environmentally Unfriendly Metals
Another factor to consider is how metals impact the earth. In a world where the state of the environment is steadily becoming a prominent issue, investing in metals that harm the environment would be a poor investment decision.
The mining of many metals has detrimental effects on the environment. Metals like platinum and palladium are good green options, as they are recycled frequently.
Metals With Limited Investment Potential
Examine the investment potential of any metal you buy. Look at the history of its value, predictions by experts, and the investment methods available.
Identifying Scams and Counterfeit Precious Metals
One of the biggest risks when investing in precious metals is being scammed by counterfeit precious metals. Whether you’re buying jewelry, bars, or coins, always confirm the purity of the metal in question.
Examine the metal closely. Look for the proper hallmarks, serial numbers, and color. You can also use an acid kit to identify gold or silver if you’re unsure of its authenticity. Magnetic tests can determine the authenticity of certain precious metals.
Remember to be cautious of suspiciously low prices or anything that appears unclear in the authenticity guarantee. When in doubt, seek the help of a professional.
Precious Metals That Are Considered Safe Havens for Investment
There are a variety of benefits to investing in precious metals. Diversification in your portfolio is essential to improving your returns. Precious metals’ protection against inflation also keeps the value of your investment steadier than other investment options.
However, there are risks associated with all investments. Some precious metals are more secure investments than others. Deemed “safe havens” by investment experts, these investments are more likely to retain their value even during market turbulence, making them the best precious metals to invest in.
Gold is perhaps the best-known of the precious metals — and for a good reason. Its value has always been prominent in our economy, as it has become more of a currency than a commodity. Gold is the most durable of the metals; it never corrodes or rusts.
Investing in gold and silver is a popular option for a reason. Gold is also more dependable than money. In times of economic and political crisis, the value of gold remains consistent and safe for investors.
Silver has significant value as both an industrial and precious metal. Manufacturers use silver in various electronics, photographic film, and medical products. While it has more functional uses, silver can be a riskier investment than gold.
When economic production decreases because of a recession or other significant event, the demand for silver also decreases, along with its price. If you want to invest in silver, you can use a price chart to predict how its value may change over time.
Believe it or not, platinum is rarer than gold. It also has industrial applications, as manufacturers use it for automotive catalysts.
This means that when auto production and sales go up, so does the value of platinum. Its value is also impacted by the geopolitical conditions in the countries that mine it — mainly South Africa and Russia.
Palladium is a prominent industrial metal. The medical, dental, and electronic industries utilize palladium frequently. Despite palladium’s rarity, it’s more durable than platinum and can be mined in many countries.
Different Forms of Precious Metal Investments
Knowing which precious metals to avoid and buy is the first step in precious metal investment. Next, you must decide how you want to invest it. There are several options for investing in precious metals, each with its own risks and benefits.
The primary forms of precious metal investment are:
- Physical jewelry and bullion
- Commodity exchange-traded funds (ETFs)
- Mutual funds
- Future contracts
Physical Jewelry and Bullion
One of the simplest approaches to buying precious metals is to purchase jewelry or bullion (coins, bars, or ingots). As long as you buy from a trustworthy source and keep it stored safely, this is one of the most dependable ways to buy precious metals, especially gold, and silver.
Economic changes don’t impact these hard assets, which are useful in crises and don’t require ongoing management fees if you store them yourself. Oxford Gold Group offers gold, silver, palladium, and platinum bullion in the form of coins and bars.
Commodity Exchange-Traded Funds
Commodity exchange-traded funds, or ETFs, are another fairly simple way to purchase precious metals. ETFs represent shares of precious metals that managers store elsewhere. These shares can be easily bought and sold on the stock market.
ETFs are liquidated assets, so you don’t have to worry about storing physical precious metals if security is a concern.
Companies involved with mining gold, silver, and other precious metals will sell shares. If you take this route, staying up to date on mining stocks is essential.
Managers control mutual funds and then work to produce gains and income for investors. Ensure you choose a reliable manager when deciding to move forward with a mutual fund investment.
Another approach to investing in precious metals is through futures contracts. Futures contracts secure access to a precious metal asset through a legal agreement. By purchasing a futures contract, the seller is obligated to sell you the agreed-upon asset when the contract expires.
Storage and Security for Your Investment
When you have physical bullion or jewelry, keeping it safe and secure is vital. You have a few options for storage:
- Home storage – store your metal securely at home in a vault
- Depository – store your metal in a space designed to safely hold precious metals for a fee
- Safety deposit box – store your metal in a bank, but remember to purchase insurance
Invest in Your Future With Precious Metals
Now that you know which precious metals to avoid and buy, the next step awaits. Investing in precious metals is one of the best things you can do for your investment portfolio. If you’re ready to purchase gold, silver, platinum, or palladium, visit Oxford Gold’s products page to see your options, or call 833-600-GOLD with any further questions or concerns.