A Beginners Guide to Precious Metals

A Beginners Guide to Precious Metals 5.00 / 5 (100.00%) 1 vote

The stock market crash a few years ago taught people to be more careful about their investments. It is not considered wise to put all your eggs in one basket as they may all be gone in an instant. Diversification is now the name of the game and precious metals lend themselves well to this purpose. While stock prices have shown great volatility, metals have proven themselves quite steady. Investors are often advised to dedicate 10% to 25% of their portfolio to these items for stability. As a beginners guide to precious metals, here are some of the most common ones used for trading:

When people think about gold, they usually conjure images of jewelry and other fine decorative items. Indeed, the metal has become a status symbol over the millennia. Ancient pharaohs and emperors had massive collections of gold. Yet it has become so much more. Modern governments keep large volumes of gold reserves for economic purposes. Industries use it as a prime material for manufacturing. It is traded in various forms by investors all over the world. It has never been easier for ordinary folks to own gold coins, bullions, certificates, and exchange-traded products. There is a finite supply and an ever-increasing demand, ensuring that prices will be favorable for years to come.

In every discussion about gold, silver is almost always never far behind. This precious metal has similar characteristics that make it a highly sought-after substance. In terms of aesthetics, silver may lack the sun-like luster of its more popular cousin but its clear and brilliant shine has won over millions just as well. Countless jewelry designs feature the contrast between the two metals in creative patterns. Indeed, silver is sometimes used as an additive to form an alloy that is much stronger than pure gold. It is also used in several artistic and medical applications. Investors can acquire silver in the form of bullion bars, coins, certificates and ETFs as well.

Platinum is one of rarest metals on Earth. It is also the least reactive which means that it has fantastic resistance to corrosion. It looks a lot like silver which is partially the reason why it has made its way into decorative items. Watchmakers like to use platinum for their premium products as it is far stronger than gold. Among the diverse applications of this metal include vehicle emissions control and chemotherapy. One disadvantage to this substance is that wide price fluctuations can occur during down times. On the other hand, platinum prices tend to shoot up when the economy is stable thanks to industrial demand.

Palladium shares numerous similarities with platinum as they are chemically related. However, the former is less dense and is relatively easier to melt compared to the latter. It should be no surprise that their applications are alike as well. Most of the available palladium is currently being utilized in the manufacture of catalytic converters for vehicle exhaust pipes while the remainder is divided into the electronics, medical, and artistic industries. Investors are often drawn to it due to its myriad uses. It can also be traded or incorporated in individual retirement accounts.

After reading a beginners guide to precious metals, you should now be able to get a feel for whats out there and what you can do to diversify in this space. Take it slow and dig deeper into your interests before taking the plunge.