Should You Invest in Precious Metals?
Some people invest in precious metals because gold and silver can act as hedge against inflation. Precious metals, unlike stocks, will not lose their worth as legal tender no matter how sour the market gets. People have always turned to precious metals when they’re not confident in making an investment in paper securities.
When the 2008 economic slump happened, confidence in gold and silver started to boom. In 2011, gold priced peaked at around $1,800 per ounce.
Despite gold and silver’s ability to cover assets in times of inflation, people shouldn’t rely on them too much. Like any other stock, you shouldn’t put most of your money in one basket or you’ll lose a lot of money when prices decline sharply. Gold and silver are known for their highly-volatile nature so economists suggest only putting around 5% of your assets in precious metals.
There are several ways to invest in precious metals. Investors can buy physical gold, which is the traditional way of owning it for wealth purposes. Investors can also go for gold-backed ETFs or mining stocks. There are pros and cons with each type of investment. Mining stocks, for one, can skyrocket depending on gold’s spot price. If the price of gold is high, mining stocks increase sharply and vice versa.
If the price of gold is expensive for you, you can always go for silver. The precious white metal’s price has dropped significantly since its 2011 peak of around $46 per ounce. Now, silver is just selling at around $16. Today’s silver price level is a good entry point for those who want to diversify their portfolio with precious metals.
If you decide to invest in precious metals, make sure to know all your options. Gold and silver are the most common types of investments in the precious metals category but there is also palladium and platinum metals. It’s just a matter of knowing your choices, why you’re buying it, and when you’re supposed to sell it.