Gold and Silver as Investments
Although it’s not recommended to invest everything you have on gold and silver, it’s a good idea to set aside some funds into this venture. Ideally, roughly 3 percent of your overall investments should be dedicated to gold and silver, thereby giving you the chance to invest in other aspects.
Precious metals, gold and silver have always been high in demand. This is especially true as the scientific community finds more and more uses for these two metals – especially when it comes to electronics.
Buying Gold and Silver
When you think gold and silver as investments, jeweler might be the first thing that comes to mind. However, many countries today actually mint gold and silver coins with collectors and investors in mind. A good example would be the American Gold Eagle coin which can be bought online and minted only in limited amounts. Gold coins specially minted by countries typically have a gold percentage and a definite value – thereby making it very easy for them to liquidate.
Your investments; however, need not be confined to silver and gold bullion. Precious metals in the form of jewelry – provided that they have a high quality – would be sufficient to cover your 3% investment.
So what makes gold and silver such great investments? Here are some reasons:
- This adds diversification to your investments, ensuring that should one type of investment suffer a setback, the gold and silver aspects are still intact.
- The value of gold and silver has been pretty stable over the years. Fluctuations are rare and doesn’t involve large gaps in between the prices.
- Silver and gold bullion are internationally accepted which means that you won’t be fenced in by share and stock limitations. With precious metals accepted practically everywhere, you’ll be able to liquidate this investment any time it becomes necessary.
- Precious metals are a limited commodity and as the rule goes, scarce items with high demands typically have a stable price.
- Precious metals are a physical commodity. This means that you can actually hold the coin and keep it in a personal vault. Now compare this with shares of stocks which are simply represented by paper.
Of course, there’s no such thing as a perfect investment. Following are some of the disadvantages of investing in silver:
- Note that due to the stable value of gold and silver in the market, earnings on precious metals isn’t really big. More often than not, one buys gold and silver with the intention of holding it for a long time instead of buying and selling them for profit.
- Not everyone has sufficient knowledge about precious metals to distinguish the real deal when they see it. This is why it’s recommended that new buyers purchase their gold bullion only from trusted sources.
Generally speaking, investments should be made towards all precious metals, but gold seems to take the top spot on the list. This isn’t really surprising considering the long history of gold and its relation with currency. There were days when gold was used as the standard for currency. The amount of money nations minted was dependent on the amount of gold they had on stock – essentially the amount of gold they have available to cover the money that was circulating in the market.
Despite the fact that the gold standard is no longer a controlling factor, there’s no question that it still bears some weight. For example, historically speaking – the US dollar and gold have an inverse relationship. As the value of the USD drops, gold becomes a more expensive commodity. Assuming that the same holds true for other precious metals, it makes sense to invest on gold as a safety net.
All in all, precious metals in the form of silver and gold bullion make excellent additions to your investment. If you’re thinking about creating a more stable portfolio, it makes sense to add some of these to your existing one. Note though that you should also consider other metals such as platinum and bronze.
Photo courtesy of pure gold coins/Flickr