The precious metals market is a source of financial growth that has been overlooked by most investors. Precious metals can be a valuable way to diversify your portfolio and hedge against inflation, but they are also very risky if you don’t know what you’re doing. Before investing in precious metals, it’s essential that you understand precisely how precious metal investments work.

Here are some six tips for getting started with precious metals investing:

1) Know the different types of precious metals. There are five main precious metals – gold, silver, platinum, palladium, and rhodium. Each one serves a specific purpose in an investor’s portfolio. Platinum is especially useful for those who want exposure to the precious metals market without moving away from major currencies.

2) Invest in physical precious metals, not futures. Futures contracts are especially risky because they rely on a third party to set the price at which you can buy or sell precious metals. If an investor is unable to make delivery of precious metal purchased on a futures contract, he is forced to take a loss. This risk exists for both sellers and buyers of precious metals through these contracts. Physical precious metals eliminate that risk entirely by allowing customers to take ownership and control over their precious metals investments from the start.

3) Consider your financial goals carefully before investing in precious metals. Investors who want their precious metal purchases to act as a hedge against inflation will be most interested in physical precious metals, like precious metal bullion. If you’re looking to buy precious metals simply as a form of portfolio diversification, however, precious metal futures could potentially be a good choice for you, if you are aware of the risks.

4) Understand the different storage options offered by precious metal dealers. The most basic form of precious metal purchases is through physical precious metals, or PMs. These are precious metals that have been cast into bars and coins; they are easy to store and trade with minimal cost. One drawback of physical precious metals is their lack of liquidity (transactions in bullion can take ten days or more). For investors who need direct access to precious metals for short-term trades, this is where gold futures contracts and silver futures contracts would come into play.

5) Consider precious metals as part of a diversified portfolio. When precious metals are purchased for their investment potential, they should be treated just like any other financial asset. They should be diversified so that you don’t put all your eggs in one basket; precious metal futures contracts can help investors achieve this goal by offering a way to trade precious metals on the stock market.

6) Have patience – precious metal prices often take time to recover from downturns. It can take years – sometimes even decades – for precious metal spot prices to catch up with their inflation-adjusted highs—and too many investors give up during times of low prices and sell out prematurely. Remember – no good financial decision was ever made reactively. Rather, take time to consider your options and make a proactive decision. Patience is critical when buying precious metals as an investment with income generation in mind

By keeping these six strategies in mind, you will be well on your way to a profitable venture of investing in precious metals!

Since long before the time of the ancient pharaohs to the dawn of our super-modern digital technocracy, the history of the world has been built around the acquisition of a bright yellow metal. Many people argue that it is simply a misappropriated fascination that keeps the dream of gold alive and that this metal doesn’t have the same value as it once did.

An argument to support this claim is that very few of us will actually achieve any amount of wealth in gold and most will be working and living by paper and digital cash today. Does this mean that gold has lost its value in the wake of digital currencies and super-modern financial technology?

According to the experts, this is not the case.

In the following article we will take a closer look at why an investment in gold is one of the most important components of any investment portfolio even today.

Why do investors buy gold?

Inflation hedging

One of the most common reasons that investors will buy gold is the capacity gold has to protect accumulated wealth from an unpredictable economy. The smartest investors in the world today will accumulate their wealth and transfer the value into solid gold to protect against social unrest and inflation. This works because gold has the tendency to rise with the cost of living. This is one of the primary reasons that gold can reduce the risks that frequently threaten an investors portfolio.

So, if currency begins to lose value because of inflation, the value of gold begins to rise. If the investor had their wealth in paper money, the value would drop with inflation, but value in gold increases. This means the investor with gold assets in their portfolio would have successfully protected their wealth from the danger of inflation. This is referred to as “hedging”.

Relative performance

The price of gold will also fluctuate with the economy, but in the long term it will perform far better than most other types of assets that can be accumulated. Unlike stocks and bonds, the returns from gold are based on price appreciation. There are other considerations the gold investor must factor into their financial plans, for example how it will be insured and stored. This is important when considering adding gold to an investment portfolio.

Diversification

Another important reason that investors will buy gold is that gold isn’t affected in the same way that other assets are affected in the stock market. Which is a good reason to maintain a portion of your funds in gold. This is called diversifying.

Diversification is an important part of any investment plan. Basically, this means that wealth is spread across a variety of different types of assets. This follows the wisdom of the old adage that cautions the investor against “putting all the eggs in one basket”. If the value of some of the assets drops, the stability of the other assets will protect against a total loss.

Finally, a word of caution, even with golds assets diversification is important. Just because it is known for performing well, the prices of gold can drop, and they will. If all the gold hoarders decide to suddenly sell their cache of gold, the prices of gold will plummet and take any over-invested portfolios with them.

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