Should You Invest in Precious Metals?

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Is it really worth buying gold? The price of precious metals can be volatile in the short-term, but over time, they always hold their value well and can protect your wealth from the effects of inflation. Precious metals are less vulnerable to stock market volatility, and they’re accessible to a wide range of investors.

So, if you’re looking for a way to safeguard some of your wealth in uncertain times, or you’re ready for a long-term investment that will help you protect and grow your wealth over the years, precious metals investing could be for you. Here’s why.

Precious Metals Have Value of Their Own

Gold and silver have been used as currency for millennia for one simple reason – they have intrinsic value as commodities. They also have the advantage of being fungible – one gold bar is worth as much as another gold bar. 

Precious metals have inherent qualities that make them valuable. Gold, for example, doesn’t rust or corrode, conducts electricity well, is soft and malleable, and has a high resistance to heat. While it’s long been used ornamentally, gold’s qualities also make it useful in a number of industrial applications, such as the manufacture of electronics. Other precious metals, like silver, palladium, and platinum, have similar applications in industry. 

Gold and Silver Aren’t Subject to Inflation

The value of precious metals isn’t tied to the value of any fiat currency. Precious metals derive their value from their own inherent qualities, and from their long historical use as currency. When the cost of goods and services goes up due to inflation, precious metals don’t lose their value – instead their value increases to match inflation. Depending on how supply and demand affects the price of your precious metal holdings, they may even gain value above and beyond inflation. In any case, putting your money into precious metals is a good way to protect your purchasing power over time.

Anyone Can Invest in Precious Metals

An ounce of gold or palladium might be too costly for some investors, but you can buy bullion in weights as little as five grams, especially for the more costly precious metals. And not all precious metals are as expensive as you might think. Platinum, though still expensive, costs half as much as gold, and silver is the cheapest of all – you can pick up a 5 oz silver bar for about the price of five grams of gold. Silver’s low spot price makes it a good entry point for investors wanting to dip their toes into precious metals, and its industrial applications mean there’s the potential to turn a profit.

Bullion or Stocks – You Have Options

When you think of investing in precious metals, you probably think of buying gold or silver bars or coins that you’ll keep in a safe at home or in a safety deposit box. If you buy bullion, you’re going to need to store it somewhere. It might not be safe in your home outside of a fireproof safe, and even then you’re going to need to add a rider onto your homeowners insurance to cover the value of your precious metals stored at home. Otherwise, you’ll need to put your bullion in a safe deposit box or have it stored at a precious metals depository. Bullion can be unwieldy to own and difficult to liquidate, so it’s a better holding if you’re planning to keep it for a long time.

However, you can still invest in precious metals without actually buying precious metals. Instead of buying bullion, you can buy stocks in precious metals exchange traded funds (ETFs), which typically invest in precious metals themselves, as well as mining and streaming companies. You can also invest directly in mining companies, which tend to offer good dividends and some potential for growth. 

Stocks are easy to liquidate, and there’s no need to make arrangements for their storage, but you can still benefit from the inherent value of precious metals. When the stock market slumps, investors turn to precious metals to protect their wealth, so stocks in mining companies and streaming companies should see stability as demand for precious metals goes up. 

There’s nothing like diversification to protect your portfolio from the ups and downs of the economy. Precious metals investing gives you a chance to bring a valuable commodity into your portfolio, and one that will protect against inflation and stock market fluctuations over the long term. Add some precious metals to your investment portfolio, and ensure your wealth isn’t diminished over time.


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