At first blush, it can seem like there’s a lot to learn about investing in precious metals. It’s full of mystifying terminology, like a secret club that only lets you in if you know the password. Cable TV fills your ears with incomprehensible fast-talking hosts analyzing charts and examining trends.
But investing in precious metals doesn’t have to be overwhelming. We’ve created a basic guide to help you begin.
Why Invest in Precious Metals?
Diversification and careful risk management are two investing techniques which can increase ones odds of success. This means you diversify investments among various financial instruments, so that if one kind of investment doesn’t do well, your investment will still be protected.
Generally, it is recommended that precious metals make up about 5 to 15 percent of your complete investment portfolio. Gold and other commodity metals historically maintain an intrinsic value (in other words, they are never worth $0) and tend to move opposite the dollar. In a diversified portfolio, this will mean you see some positive no matter which way the overall economy shifts (if the dollar is worth less, your gold will be worth more, and vice versa).
However, gold, silver and other precious metals are different from other investments in that they do not earn interest. These possessions are more like “wealth insurance,” a way to guarantee that, no matter what happens in the economy as a whole, you will always have funds available to you. Because of the safe haven apect, people looking to precious metals as a long-term investment do not often sell or trade.
Read the whole Beginner’s Guide to Precious Metals Investing, or look up other topics in Provident Metals’ Knowledge Center.
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