For those looking to maximize their portfolio’s diversity there are few options better than investing in gold and other precious metals. Long gone are the days where the whole industry was dominated by shady pawn brokers in seedy shops, neon signs garishly shouting that you should buy gold here. While those cankers will always hang on the business, wise investors have learned that not only are precious metals a great investment, but that there are smart ways to go about adding it to your holdings. They’re a great way to maximize your possible earnings in the market while minimizing the amount of risk you take on.
There are more than a few reasons why investment in precious metals is becoming an increasingly popular addition to the savvy investment portfolio. That said, there are smart ways to go about it and not so smart ways to go about pulling the trigger on it. This article will go over some of the reasons that throwing your hat into the precious metals ring might be good for you, and a few reasons why it might not be. Like any commodity traded on the public market, there are pros and cons that mean different things for different people. You may not be someone who can truly take advantage of the benefits that come with adding gold or silver to your holdings. Or, it may be exactly what your portfolio needs. Read on and figure out which category you may fall into!
Precious Metals are Useful
There are generally four kinds of precious metal people can invest in, and each one has a variety of uses that allow them to cover a wide berth of markets. These four cornerstones of the markets are gold, silver, palladium, and platinum. Of these, the former two are by far the more widely traded and the most widely used across multiple industries. There will always be a high demand for these metals, particularly in tech fields, due to the one-two punch of high utility and high rarity. You’d probably have to invent a time machine and go back a few thousand years to get on the ground floor for investing in them, as they’ve become an absolute staple of the market. But, fortunately, if you did build a time machine chances are high you’d have to use these metals in the components anyway!
Platinum, aside from its inherent value due to being one of the rarest minerals on the planet, is useful in both dental and general surgical instruments. Palladium is mostly used in constructing fine watches. On their own, those are decent markets to get in on, but not game changing. What does make them more valuable is their place in the automotive industry. Platinum and palladium are both essential components in making catalytic converters, which literally could not function without them. And, of course, you can find both of them in the fine jewelry industry. However, while both metals have earned their place and carved their niche in the jewelry world, they’re both overshadowed by their bigger brothers.
Gold and silver are the kings of the market, and have been since ancient times. Once used as the cornerstone of the concept of money, and eventually as the standard against which representative currency was measured before the rise of fiat currency, their modern place in the markets are astounding. The tech sector runs on gold and silver just as much as it does on silicon, as both are utilized in the creation of capacitors, transistors, and other circuit board components. They have a unique chemistry that makes them simultaneously excellent conductors of heat and electricity and highly resistant to the damage such conduction can cause. In fact, almost every piece of modern computing technology has gold and silver in its construction. The number of uses for gold alone are staggering, and listing them all would take an entire article unto itself.
They’re a (Mostly) Secure Investment
The other major factor that makes investment in precious metals a generally good idea is that they tend to be among the more secure option compared to other commodities, rivaled perhaps only by water. Not even oil has the same level of consistency that our shiny friends do, and the world runs on oil! Financial analyst Kirk Elliot PHD has noted that the precious metals market is one of the few markets that can withstand fluctuations in the value of the dollar and other kinds of volatility. Indeed, a unique property of gold in particular is that it tends to raise in value when the dollar dips, a phenomenon that has existed since the dollar was divorced from the cold standard and made into fiat currency – that is, currency whose value is self-evident and backed by the full faith and power of the issuing government.
There are, naturally, some things to be wary of when thinking of investing in precious metals. No commodity is a surefire winner, and anyone who tells you otherwise is probably trying to scam you. Indeed, there are plenty of disreputable organizations looking to separate you from your hard-earned cash for the chance to get rich quick in the metals market. Avoid any organization or agency that tries to convince you that you can’t lose on these commodities. They’re a risk like any other, and having a clear head going in is the only thing that will keep you from being taken in.
For the most secure possible way to get in on the markets, focus on putting your assets into technological uses, particularly in emerging markets that have a higher demand for them. You should only ever let precious metals consist of about 5% to 10% of your total holdings – and that means that ALL your metals should total to those values, not 5% or 10% for each kind. With a keen mind and a cool head, you may find that investing in precious metals is just what your portfolio needs.
