Before mankind fully grasped the concept of currency and developed a monetary system, precious metals have reigned for thousands of years throughout history as a mean of trade and a symbol of power. Gold, in particular, was revered in many ancient cultures and used to embody the wealth of countless nations. However, this fascination remains strong even to this day, which is why investing and dealing with gold and other precious metals still holds sway in our current economic conditions. Considering what has happened to the world economies over the past couple of decades, money isn’t exactly worth the paper it is printed on, so let’s see why this popular golden argument is gaining credibility…
Types of precious metals
Gold may be the most popular metal out there and definitely attracts the most attention, but it is surely not the only metal to invest in. There are three other major metals that shape the entire economic picture – silver, palladium, and platinum. Their demand has significantly increased all around the globe, no matter if it comes in the shape of jewelry and coins, or in their raw extracted form which is primarily used for industrial purposes.
As for their physical and chemical traits, gold is a crucial element in the electronics industry because it is an integral part of many hi-tech components and products. It is highly resistant to corrosion, it is chemically stable, it superbly conducts electricity and also withstands heat. Platinum is integrated into a lot of medical equipment, as well as automotive and computer parts, while palladium, which is a tad softer than platinum, is a key element in catalytic converters because it can withstand oxidation and substantial temperatures. It can even replace gold in electronics due to its notable conductive traits.
There are several advantages to investing in precious metals. Unlike shares of stock or anything that exists on paper, precious metals are first and foremost a physical commodity. They are also a limited commodity, so there can never be an overabundance of such precious elements. These resources are not infinite and even though they are mined in certain parts all around the world, the total quantity isn’t growing at a rapid rate.
One thing that you should also bear in mind is that the price of precious metals usually runs in the completely opposite direction of almost all Western economies. For instance, when the US economy weakened and sustained a significant downfall, the price of gold practically skyrocketed. Consequently, once the US economy gets back on its feet, the value of gold would ultimately drop. Consider it to be a counter reaction to inflation, so it is no wonder why so many countries hold on to their gold reserves in such turbulent times. However, it is all a matter of perspective – on one hand, you can get immensely rich if you have invested in gold or silver due to its jump in value, but on the other hand, that will be proof enough that your country’s economy is not doing well at the moment.
Still, whatever your ambitions are, you need to check how the market is doing and estimate whether it is a smart move to invest, or not. Get your facts straight, analyze the economic trends and visit professional precious metal dealers for more insight. Considering that it can be a risky business, try checking out reputable dealers, such as Goldmart, especially if you have some uncertainties and wish to acquire sufficient knowledge which will help you make the right decisions.
Such investments can be extremely volatile, because of many value roller-coaster rises and dives which can occur out of the blue. One year precious metals can jump for more than 50% in value, which isn’t an unusual situation at all, however, next year, the value can plummet without any hints. It is an extremely volatile commodity, despite the fact that right now you can get a decent buck from your investment. That is why it is not recommendable to deal with gold unless the situation is dire and something economically disastrous has happened. Call it a last resort.
Also, don’t get your hopes too high, the current big precious metal ship has unfortunately sailed. There are some increases of value even today, but the main thing has passed a few years ago. If you didn’t own any precious metals during that period, you won’t get rich like crazy. Well, at least not until the next rapid rise in price.
Another fascinating, yet also troubling downside is that a lot of gold is, was and probably will be sold because of paranoia. Yes, you’ve read it right – paranoia. American media tends to embellish its economic state to the point of apocalyptic outcomes, so many people are convinced, or forced to think that the US economy is about to collapse and that gold is the only road to financial salvation. Once you start thinking with your head, you’ll realize that this is just a media gimmick which makes a lot of money and leaves followers who buy in with a very volatile investment.
Finally, considering that gold, silver, platinum and palladium are a limited market, there is a substantial amount of speculation behind it. Speculating is, of course, good, but people who do it too much wind up being more interested in short-term earnings, rather than long-lasting investments which can help you make a fortune over time. If you want to compete with all sorts of speculators, then you have to know precisely what you are doing. Truth be told, reaching the top of this investment game is a very difficult feat.
If you are into investments and all sorts of assets like stocks, bonds, cash, foreign currency, properties, and so on – than precious metals are definitely something you might want to include in this large portfolio. They may be volatile, which is why you should always aim to counterbalance things out with other more stable investments. Just remember that this is not child’s play, so don’t get involved unless you are certain of your actions and consequences. It takes years to garner enough experience in short-term investing, but you have to start from somewhere, nevertheless, right? Do your homework first and just take one step at the time. Learn from your mistakes, do adequate research, extract information regarding this matter and don’t be afraid to ask for help and advice. This approach will make a difference between your rise and your fall.