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Investing in Precious Metals – Everything You Need to Know

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Gold prices have risen steadily this year while other markets around the world have endured a turbulent time to say the least. This movement highlights one of the key factors behind why many people choose to invest in gold and other precious metals. They are often a store of value in times of market volatility, a safe haven type of investment. This makes them a very attractive type of investment to all.

Here we will run down some of the basics around each of the most popular precious metals, what moves their value, and most importantly, how you can easily get started investing and these other precious metal assets.

Types of Precious Metals

Typically, when we speak of investing in precious metals, gold is often thought of as the only choice. While it is certainly the most popular choice, there are a couple of other key precious metal markets that can pose as ideal investment opportunities depending on your style.

Investing in Gold

Gold is of course the king when it comes to these markets. It is recognized as one of the most secure stores of value in any asset you can invest in. The reasons behind it being a safe haven in times of economic strife stem largely from the fact that the gold market is not impacted in the same way by supply and demand as many other assets. Sure, it has many practical applications within industry, and of course jewelry, the existing mined supply though greatly exceeds the new supply being mined.

This allows for great control over the price from those holding the asset, particularly when there is economic uncertainty which can send the price higher as we see in the market today. During periods where interest rates are low and the general market return is not high on other assets, you will also see a strong move towards gold.

Investing in Silver

Silver is another of the most popular choices when you are investing in precious metals. It has a great number of uses in electrical appliances and circuitry, and so it tends to be more volatile based on the demand from these areas.

To that end, silver can be much more reliant on a strong performing economy in which industry demand for the commodity is high. Still though despite its much greater volatility, it is still seen as a hedge in times of weakness in the US Dollar, and against rising inflation. Both of these factors are playing a role currently as the Dollar weakens, and guidelines on inflation are being loosened.

Investing in Platinum

This is a third choice which many traders may not often consider when investing in precious metals. The fact is though, that Platinum has previously been known to trade at higher prices even than gold. This is in part due to the rarity of platinum.

It is widely used in the auto industry as an essential component in catalytic converters. This though brings with it some element of exposure to the auto industry. This exposure has seen contrasting fortunes at the moment for platinum as the prices of the safe haven gold, and silver have soared. Still, a bounce back in the industry could certainly see a quick reversal of fortunes.

How to Start Trading Precious Metals

The barriers to entry here as not what traders sometimes imagine. In reality, trading in most precious metals, be it gold, silver, platinum, palladium, or others can be as simple as trading in any stock or other asset. Here we will take a look at ways in which you can invest in these precious metals directly through most major brokers, and without having to buy and store large amounts of the actual metals themselves.

Trading in commodity CFDs is a very popular method over the shorter-term if you are looking to get involved in trading the values of precious metals. With CFDs, you are not buying the underlying asset itself, but you are trading based on the price movement between opening and closing of the contract. It is in many ways similar to trading options or futures on commodities with the benefit that you never risk taking delivery of the actual asset in the same was as you would when trading other derivative contracts. It is also one of the most accessible ways to get involved, since most major brokers who offer forex trading, will also have some major commodity CFDs available to trade.

If you are searching for more conservative methods of investing in any of these precious metals, then commodity ETFs are always a great choice. These can effectively invest your funds into a wider selection of precious metal related companies. Not only does it help you to broadly diversify your portfolio, but the ETF in itself can hedge against volatility risks even further. You could also choose your own single stock investments in firms related to your chosen precious metal. These could be mining companies, or any related or reliant upon the production or processing of the metals. These are just a few of the most popular, and accessible methods for you to invest, particularly if you want to avoid directly buying physical gold or other precious metals.

Another option is just to buy the precious metals directly, in this case we recommend:

If you prefer to skip the homework, we recommend these two companies:

  1. Gold Broker
  2. Bullion Vault

Is Investing in Precious Metals Risky?

Just like investing in any other assets or markets, there is always a certain risk involved when investing in precious metals. Even gold which is often described as “recession-proof”, can be volatile. This goes even more so for the likes of silver and others.

With that thought in mind then, it is essential to do your research and know the risks before investing. You should also take into account that some of the vehicles for investment into these assets can vary in terms of how risky they are. This also means checking any fees or spreads on each of the assets you are trading. If you follow these steps, then you will be setting yourself up for potential success when it comes to your precious metal investments.

Precious Metals Prices

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Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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ESMA: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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