Investing in Precious Metals A Primer

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					Investing in Precious Metals:
                          A Primer
  Investing in Precious Metals: A Primer

  For thousands of years, gold and silver have been admired and considered valuable.
  More recently, other metals like platinum have been added to the list.

  The value of these metals tends to increase over time, so it’s usually a good idea to
  include precious metals in your portfolio, but how? Which ones should you buy and
  how should you invest in them?

  Read on to learn more about precious metals and your options for investing in them.
  There are several ways to invest in platinum, gold, and silver.


  Gold is easily the precious metal with the most trading activity. The laws of actual
  supply and demand do not largely affect the price of gold. There’s a lot of gold above
  ground that’s simply being hoarded, for lack of a better term. When these investors
  and hoarders get the urge to sell, the price drops.

  When they feel like buying, the relatively small new supply is used up and the prices
  are driven higher. The price is largely a function of emotion or sentiment.

  Factors that increase the desire to own gold:

         Global financial concerns.When the population largely considers banks to be
         unstable, gold is frequently used to store wealth.

         Inflation.Gold has history of maintaining its value during inflationary times.
         When inflation is increasing, it can be a good time to invest in precious metals.

     War and political issues.These issues have also increased the amount of gold
     hoarding. An entire life's savings can be made into a very small and portable


Silver has much greater industrial use than gold, so its price is a function of both its
current desirability as a means to store wealth and its use in industry. Because of this,
the price of silver fluctuates more than the price of gold.

Silver is used in batteries, microcircuits, superconductors, and more. At one time, the
photography industry used a lot of silver, but digital cameras have almost completely
eliminated that demand.


Platinum is much rarer than gold or silver, so it tends to cost more than either, but
this isn’t always true. Like silver, platinum is used in industry. The main use is in
automobile catalytic converters. Because of this, the auto industry largely
determines the price of platinum through the level of auto sales and production.

Platinum is the most volatile of the precious metals.

Options for Investing

   1. ETFs. Exchange traded funds offer a very simple way to invest in precious
      metals without have to store the metals yourself. You can think of ETFs like
      mutual funds that own and invest in precious metals.

   2. Mutual Funds and stocks.There are plenty of options here, the most common
      being mining operations. The price of mining shares tends to move with the
     price of the corresponding precious metal.

   3. Futures and options.If you want to make big bets on precious metals, this is the
      ticket. These derivative products offer the opportunity for big profits and big


                                      4. Bullion.This includes coins and bars. You'll need a safe place to store it, but if
                                         you're expecting the worst, this is the best option. However, coins and bars
                                         aren’t as liquid as the other options.

                                      5. Certificates.These provide all the benefits of bullion without having to store it.
                                         But don't expect to trade your gold certificates for anything of value if there’s a
                                         global economic disaster.

                                   Precious metals are worth consideration for every investor. They offer excellent
                                   protection against inflation. They also have a very low - and even negative -
                                   correlation to many other investments like stocks and bonds.

                                   Even a small investment in precious metals can reduce the volatility and risk in your
                                   portfolio. Look into precious metal investing and see if it makes sense for you.


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