Precious metals are considered one of the safest investments. Historical evidence shows that precious metal investment has held against the worst market conditions and assured steady returns to the investors.
According to investment experts, diversifying your precious metal portfolio reduces volatility and risk. This article discusses how to do it.
Which Metals to Invest In?
Most people who invest in precious metals purchase gold, silver, palladium, or platinum. Some investors buy all four metals to diversify their portfolios. Investing in all four metals can shield you against positive and adverse events in the metal category. Let’s understand the importance of all four metals in the precious metals investment.
It is one of the oldest precious metals used by investors. The gold prices skyrocket when paper money struggles to hold its value. It is one of the prized assets that is being valued and considered heritage since 1223 B.C. Here are some reasons why gold is regarded as the most substantial asset.
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Not all can afford to invest in gold. If you are looking for an affordable precious metal, silver is your best bet. Silver is also considered a valuable asset for many centuries. However, silver also has some industrial uses.
Silver is used in renewable energy, water purification, health and hygiene, and several chemical processes. If the demand for silver increases in these fields, its value also increases.
It is a member of the platinum family. It does not have long investment history like gold and silver, as it is relatively new to the market. Its existence in nature is rare, which makes it so valuable.
Platinum got recognition as a separate entity in the 18th century. Though it is a good investment option, it does not have the legacy enjoyed by silver and gold. Platinum is a coveted choice for engagement and marriage rings. Metal also plays a vital role in biomedical devices, glass manufacturing, neurosurgery, dentistry, and automotive parts.
There has always been a deficit of platinum in the market since its inception. And there are no underground reserves or massive stockpiles of this precious metal. The combination of these two things allows strong portfolio performance and encourages stronger price moves.
Investing in ETFs
Exchange-traded funds are available for silver, gold, and palladium. Investing in ETFs is convenient as you don’t have to worry about the security of precious metals. When you invest in ETFs of precious metals, you don’t have physical access to the precious metals you are investing in. There is no delivery of gold or silver bullions or coins in ETFs investment.
Bullion is a safe investment for those wanting to invest in various precious metals. In bullion investment, you have access to physical metals. You can keep them safe in a box and sell them in time of need.
Mutual Funds and Stocks
You can invest in shares of precious metals miners that are connected to the prices of precious metals. However, you need a good knowledge of the valuation of mining stocks for better returns.
If you want a safer option, you need to stick to precious metal funds with a stable performance. To sum up, these are some of the ways to diversify your precious metal portfolio.