If you want to invest, you can choose from a wide range of interesting financial products. One of these products is precious metals. Precious metals are pure metals that have huge economic value. In this article we’ll discuss this type of investment further.
Precious metals are valuable because they are scarce and because they have unique physical qualities that are useful in many products and processes. Nowadays precious metals are often used in high-tech materials within the medical and aviation fields. Did you know that your smartphone, laptop and flat screen television also use these precious metals? Their various purposes make precious metals very desirable for traders and investors.
Precious metals as an investment
Despite the fact that precious metals don’t receive any interest, these metals are a very popular store of value in times of crisis. This is because precious metals offer an intrinsic value that other financial instruments simply can’t offer. The value isn’t affected by inflation, currency reforms or the success or failure of a company. Even bankruptcy of a bank does not affect the value of precious metals.
This makes precious metals very popular amongst investors in times of recession. Moreover, since the value of precious metals can’t be affected by an unstable economy, this type of investment offers certainty during uncertain times.
Trade precious metals online or physically?
You can trade precious metals online with a broker and quickly make a profit. We have compiled an overview of the best brokers that offer a free demo account, so you can try trading gold online. It’s also possible to physically trade precious metals such as gold and silver.
Coins or bearings?
If you have decided to invest in precious metals, you can choose to invest in coins or in bearings. Bearings are used when you trade large amounts and you have proper storage. Private traders probably see more value with coins because the nominal value is lower. The nominal value is also shown on the coins, which means you could probably use them as payment at some places.
Pricing of precious metals
The value of precious metals is set by supply and demand. The price can decrease when new mines find more precious metals or when banks buy a large amount of a particular metal. When demand grows, for example during an economic crisis, the price of precious metals goes up. Gold, the most popular precious metal, is traded in dollars. This means that the price will fluctuate within certain limits with the dollar.
Make sure you know in what currency a commodity is traded. When commodities are traded in a currency other than your own, you’ll also have to deal with something called foreign exchange risk.
Silver or gold?
What’s the best precious metal to invest in? After the gold rush that occurred a few years ago, more and more traders are choosing silver. This is also due to the increasing demand from the industrial sector.
Therefore silver is currently the most interesting metal to invest in. However, this doesn’t mean that you shouldn’t trade in gold. In fact, a lot of traders still do.