Do you have a plan to invest in precious metals but you’re not yet convinced if this investment is right for you? If your answer is yes, then this article is a must-read for you.
Precious metals were used as money in ancient times. Also, they’re rare commodities highly valued by investors, traded to diversify one’s investment portfolio, and as a hedge against inflation.
What Are Precious Metals?
Precious metals are metallic chemical elements that naturally occur. Some examples of precious metals include palladium, platinum, silver, and gold.
Trading and investing precious metals involves buying precious metals through metals exchange-traded fund (ETF), derivatives markets, or owning physical coin or bullion. Investors can also consider investing in physical gold and silver via an individual retirement account (IRA) from a reputable partner company, such as The Oxford Gold Group.
Reasons To Invest In Precious Metals
But why is it a good idea to invest in precious metals? Find out the answer to this common investment question below.
1. Precious Metals Are Secure Investment
If you’re looking for a secure investment that you can rely on in times of crisis and increasing inflation rates, then precious metals are a must-try.
Here are major precious metals you can choose from as secure investments:
- Gold: Gold is malleable, durable, and used in making jewelry. Most of all, gold is a base or form of currency. Additionally, the price of gold is less affected by supply and demand. When money and banks become unstable, this precious metal is perceived as a safe investment with good value. Also, gold maintains its value even when real estate markets, bonds, equity, and other investments are negative.
- Silver: Silver has a store value and plays an important role as one of the industrial metals. That’s why silver’s price is volatile. The price of silver can be influenced by its applications, like its use in the photography industry, manufacturing medical products and electrical appliances, and its industrial use.
- Platinum: Since platinum is rarer than gold and silver, this precious metal usually has a higher price than gold, especially when politics and markets are stable. Platinum is in demand in the automotive industry, which is used as catalysts to reduce emissions. This precious metal is also used as chemical refining and petroleum catalysts.
- Palladium: Palladium has many industrial uses. This shiny, silvery precious metal is used in manufacturing processes for industrial and electronic products. Palladium is also used in medicine, dentistry, jewelry, groundwater treatment, and chemical applications. When palladium is combined with yellow gold, it produces a stronger alloy metal than white gold.
Great Options To Grow Your Investment Portfolio
If you’re looking for a highly secure investment, then you should consider investing in precious metals. But it doesn’t necessarily mean that you buy physical precious metals in coins or bullions and hide them somewhere in your home, like your vault or under your foundation in a large box with fine jewelry pieces.
Below are the different options available when investing in precious metals:
- Bullion: If you have a highly secure safe or safety deposit box, you can buy physical coins and bars. However, possessing physical coins and bullion can be bothersome since you might worry if they’ll get stolen.
- Certificates: You can own physical gold ownership with certificates, and you don’t need to worry about transportation and storage. However, certificates are only papers. You can’t expect any person to take them in exchange for cash or any valuable item unless you hold the physical gold or silver.
- Commodity Exchange Traded Funds (ETF): ETFs exist for major precious metals, which are a convenient way of buying and selling silver, gold, and platinum. However, investing in ETFs doesn’t provide you access to the actual physical precious metals, which means that you don’t have any claim on the precious metal in the fund and you won’t get the actual delivery of the silver coins or gold bars you bought.
- Stocks and mutual funds: In this type of precious metal investment, your shares are leveraged to the metals’ price movements. Therefore, you need to be knowledgeable how to value mining stocks, and then stick to stocks or mutual funds with high-performing managers.
- Futures and options: For investors who are eyeing to make large bets on precious metals, they can try investing in futures and options markets. You can have the biggest potential profits and losses with derivative products.
- Self-directed Individual Retirement Account (SDIRA): You can buy physical gold and silver and entrust them to a custodian through an IRA account. The custodian will manage your funds the way you like them and deposit any precious metals you purchase in a highly secure storage. Custodians work with different non-government, non-bank, and private storage facilities with several depository locations throughout the country.
Once you open an account and buy precious metals through IRA from a partner company, your custodian will ensure that your precious metals will be shipped by an insured carrier. This way, your precious metals are covered should anything happen in the depository. So, make sure that your precious metals have an adequate insurance policy to protect your assets against physical damage or loss that arises from any cause, including Acts of God (natural disasters like fire and flooding), before buying.
You Can Protect Your Wealth And Future
Everybody learned a lesson from the current crisis. Because of the business and financial impacts of the pandemic, many people realized the importance of having a reliable investment that’s less affected by crisis, one of which is precious metals.
Owning precious metals, like gold coins, is a smart investment because these are the only assets that don’t require sale or liquidation before taking distributions. Additionally, precious metals can give you a choice: you can either liquidate precious metals inside your IRA or you can take them out of your IRA plan in physical form as ‘in-kind’ distributions.
Taking a hold of your assets is a way to protect and grow your wealth when you’re ready to liquidate your assets. You can also pass your gold and silver to your beneficiaries who’ll inherit them on a ‘stepped-up’ basis (only low capital gains taxes apply).
Receive Physical Metals With Good Value
It’s important to invest in real precious metals. So, deal with a company that doesn’t only provide any certificate or paper products. You need to make sure that your depository account will have real and actual physical precious metals, like gold and silver coins, in your safe box.
It’s essential to have access to your precious metals at any time. You should have access to your precious 24 hours a day via your online account. Once you reach the distribution period, you’ll have the option to liquidate your assets to receive cash or you can have your precious metals delivered to your place.
Here’s how the transfer or rollover of precious metals work in a self-directed individual retirement account (SDIRA):
- Open an account: You need to open a self-directed IRA with your custodian. The partner company (where you purchase physical precious metals) will walk you through the application process to complete your account.
- Make arrangements for transfer or rollover: Once your account has been established, the company will contact your custodian to make arrangements to finish your account’s tax-free or penalty-free rollover. Depending on how fast your IRA account custodian sends the funds, the length of transfer can take anywhere from several business days.
- Choose your precious metals: Once the funds have been transferred and confirmed, your partner company will provide you precious metal options. For instance, you can decide on a combination of precious metals, such as gold, silver, palladium, and platinum. Your metals will be shipped via a secured courier to your safe depository storage. The precious metals will be carefully inspected for authenticity, itemized, and then store in your deposit box.
You Can Monitor Your Investment Conveniently
So, how do you want to monitor your precious metals? When you possess actual bullion or coins, you can check them anytime you want in a safe box or insured depository storage from a bank or any partner company you prefer.
For IRA, monitoring your investment is very convenient. SDIRA custodians provide their clients with online access to their accounts. So, if you invest in SDIRA, you can easily track your investment’s performance anytime and anywhere. You’ll also receive a statement from your custodian monthly or quarterly, depending on your preference.
There are many good reasons why investors, whether beginner or seasoned, should invest in precious metals. For one, you have the option to liquidate your precious metals if you need cash or take them out in physical form so you can hand them over to your beneficiaries.
Now more than ever, investing in gold, silver, and other precious metals is easier because you can work with a custodian and highly secured and trusted partner companies to protect your investment and grow your wealth. Hence, you’ll rest assured that your hard-earned money won’t go down the drain.