Is it a Good Idea to Invest in Precious Metals?
Though crude oil dominates the global market regarding commodities and trade, some experts believe precious metals could be a more profitable choice for investors within this asset class. Investing in precious metals is nothing new, with metals such as gold and silver being used as a currency for thousands of years.
This year, in particular, there has been consistent growth for almost all of the most popular metals, making for some exciting market competition. While investors in precious metals have noticed a significant trend emerging over the past few months – which has seen the price of gold soar – the past year has been nothing but ordinary for the market.
With the abundance of gloomy news from the previous year, the demand for gold and other precious metals has skyrocketed. This, in turn, has catapulted the valuable yellow metal higher due to several trends. This has all combined to create good conditions for investing in precious metals such as gold or platinum, should you choose.
So read on, and we’ll run you through why the timing might be right to invest in precious metals.
Reasons to invest in precious metals today
Ultimately, there are two leading reasons that result in the present representing a suitable opportunity to invest in precious metals. In the following section, we explain these reasons in detail.
Economical to purchase
Metals such as gold and silver are some of the most popular metals. They can also be easily purchased from almost any bullion trader, market dealer, or bank. This widespread availability renders gold and silver great metals for metal investments. Aside from being easily accessible to the general public, these metals are also abundant in the markets. This abundance means that anyone can easily acquire them; all you need are the right resources and to be equipped with adequate knowledge.
These days, the greatest benefit of investing in gold and silver is their economical price. This means that it is quite common for investors to own some of these precious metals if they have the funds.
Furthermore, investors have a wide range of options when it comes to investing in metals. For instance, investors who have a hard time investing in a full ounce of metal like gold can still go for a more affordable and reliable precious metal, such as silver.
Finally, due to their affordability, many countries use silver coins, bullion, and ornaments as gifts. This has further normalised bullion trading, opening the door for widespread investment in precious metals.
Increasing global demand
The second reason which makes the timing ripe for precious metals investment is the increase in global demand. The demand for precious metals has surged in the previous year.
Despite many economic uncertainties and market volatilities it has encountered, the demand for those two metals continues to escalate compared to other metals. In particular, many investors and business owners consider precious metals such as gold and silver as safe-haven investments. This is due to the continued and stable growth in their market.
Interestingly, it’s not just large-scale gold and silver jewellery manufacturers making huge profits due to the high demand for their products. The same is true for small business owners making jewellery available to customers on a large enough scale.
Anyone looking at investing in a precious metal should probably familiarise themself with the term “exchange”. An exchange is a marketplace that supports trading derivatives, commodities, securities, and other financial instruments. Generally, an exchange is accessible through a digital platform or sometimes even at a physical address where investors organise to perform trading.
An exchange's chief responsibility is to uphold ethical and fair-trading practices. These practices play a significant role in ensuring that the distribution of supported security rates on any exchange is effectively relevant in accordance with real-time pricing.
Depending upon where you reside, an exchange may also be referred to as a “bourse” or a “share exchange”. Either way, as a whole, exchanges are present within a majority of countries in the world.
So who is listed on an exchange? As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange, for example, a company must divulge information such as their minimum capital requirements, audited earnings reports, and financial reports.
Not all exchanges are created equal. Some outperform other exchanges significantly. The most high-profile exchanges to date include the ever-so-famous New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital. This is most commonly seen in the form of initial public offerings (IPOs). Exchanges can now handle other asset classes, which has become necessary given the recent rise of cryptocurrencies as a more popularised form of trading.
One of the most important things you should know when investing in precious metals is the importance of exchange-traded funds (ETFs). These can be used to purchase all of the prime securities of a specific index. These ETFs serve as a more convenient and liquid means of buying and selling gold, silver, and platinum.
It’s important to keep in mind that investing in ETFs does not give you access to the physical commodity itself. This means that you will not see an actual gold bar or a silver coin following your investment (for security and safety purposes).
Which metal should you invest in?
The precious metal you invest in can be an extremely important and personal decision. We’re not here to offer advice, only to lay out some of your options.
When making this choice, a range of determining factors come into play. In this next section, we run you through some of the leading reasons why it might make sense to invest in gold or platinum.
If you’ve decided to invest in metals but are unsure which one makes the most sense for you, it could be good to begin with gold. Also known as the “king of metals”, gold has long been the leading metal associated mainly with investments and money. On top of all that, it is also recognised as one of the most secure stores of value in any asset you can invest in. What’s more, the gold market is not impacted by the supply and demand of other assets. This results in it being commonly known as a “haven” in times of economic strife. This metal also offers many practical applications within industry, which only boosts its popularity and reputation.
The price of gold has also remained stable despite the many turbulent times that other global markets have had to endure. This is one of the major reasons people choose to invest in gold and other prized metals in times of economic uncertainty. Precious metals, in general, serve as a fallback alternative whenever there is a market crisis, making them a profitable investment for some investors who use them as a hedge. Investing in gold allows substantial control over the price of those who hold the asset, particularly when there is market variability.
Whenever there are relatively low-interest rates among other assets on the market, you may observe prominent moves toward gold. These times of uncertainly can be a great time to invest in gold, such as 24-karat gold jewellery.
Next on our list of precious metals: investing in platinum.
Apart from gold and silver, platinum is another valuable metal that you might consider investing in this year. Platinum is a precious metal that many traders do not often consider when making an investment, as it always tends to play second fiddle to gold.
Despite being known to trade at higher prices than gold, platinum is not that popular among investors due to its relative scarcity. More than just an investment metal, platinum also serves as an essential component in catalytic converters, which are widely used in the auto industry. Additionally, this metal can positively impact your health.
For instance, platinum is known to be hypoallergenic, which means it will not cause rashes and allergic reactions for those choosing to wear pure platinum jewellery.
Whether you decide to invest in gold, platinum, or something else entirely, we here at 7879 have covered you with our impressive range of 24-karat gold and pure platinum fine jewellery.
Our bespoke jewellery items allow you to make a precious-metal investment for the modern age, with beautiful gold and platinum jewellery that doubles up as a wardrobe essential.