So, you’re looking to expand your investment portfolio. That’s a fantastic idea! It’s no secret that a more diverse set of investments is a great way to minimize risk and maximize potential wins in the market. You, the responsible investor that you are, have decided to add some extra strength to your position and put your money somewhere that will work for you. You’re ready to diversify, and you’re ready to do it the smart way!
So, now what?
Finding something worth investing in can be a struggle sometimes. Even the smartest, most experienced traders have trouble determining what the best bet is going to be. There are a few markets that find that sweet spot where security, growth, and utility intersect to produce a solid choice. As far as market commodities go, you could do a lot worse than precious metals. With the looming threat of recession, which you can read about here, now is a great time to invest in something stable. In this article we’ll explore what makes precious metals so good for your portfolio.
Precious Metals are Useful
The four main metals people invest in are gold, silver, platinum, and palladium. All four are extremely useful in a variety of markets, making them one of the few commodities that will constantly be in demand. For example, platinum and palladium are essential to the automotive industry for their use in catalytic converters. Platinum is needed in the dental health field for surgical instruments, and palladium is used in fine watches, and both are renowned for their place in fine jewelry.
The undisputed kings of precious metal utility are, naturally, gold and silver. They find their way into almost everything! Setting aside the obvious jewelry applications, both of them have extremely high utility in the technology market. Silver has an unusually potent ability to conduct electricity and heat, making it ideal for capacitors and circuit boards. You probably have more than a few electronic devices that rely on it to function! Gold is even more ubiquitous, and is such a good conductor that almost every single complex electronic device on the planet has a small amount of it inside. You can see even more uses for gold at https://geology.com/minerals/gold/uses-of-gold.shtml!
They’re a Secure Investment
There’s a reason these metals have been used as the standard for currency for thousands of years. Their rarity and value have made them stable anchoring points for representative currency since paper money was invented. It used to be that a dollar stood for a certain amount of gold at any given point in time, and that anyone could theoretically exchange those notes for the gold they owned by them. In 1971 the United States Government divested the dollar from the gold standard, switching to a fiat model wherein the dollar was backed not by any tangible thing, but buy the strength of the government itself.
While switching to a fiat model has some advantages, it also has the major disadvantage of subjecting the dollar to more volatile market forces. When the value of the dollar goes down, the whole global economy suffers. Should the dollar’s value collapse, such as in the event of a recession or depression, precious metals will retain their value either way. According to Lear Capital, gold and silver specifically are secure investments against market instability. Their utility and inherent value as a currency and commodity make them one of the safer options to put your money into.
There Are Lots of Ways to Invest
The versatility of these metals doesn’t end with their uses in electronics and other goods. There’s a shockingly high number of ways to invest in them! The most common forms of investment in gold and silver are either as coins or bullions. Coins are popular for their beauty and, frequently, their use as actual currency. The American Silver Eagle, for example, is composed of 1 oz .999 fine silver and has a face value of one dollar – far less than the worth of the actual silver used to make it, but backed by the United States government as legal tender all the same. Other countries have their own coins, like the Chinese Panda ad the Canadian Maple Leaf, with similar amounts of silver and similar status as legal tender.
Bullions, meanwhile, are more traditional forms of gold and silver before being made into coinage. They’re usually kept in the form of bars or ingots, and are valued by weight. In order to qualify as a bullion, the gold variety must be at least 95.5% pure and the silver variety must be at least 99% pure. These are usually kept in reserves; the famous Ft. Knox gold is kept in the forms of bullion bars. While coins are the more popular option due to their use as tender and their usually striking visual design, bullions are an excellent no-nonsense choice for those who want to invest without the bells and whistles. Both coins and bullions are excellent investments, especially as hedges against inflation and market volatility.
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