Whenever precious metals are mentioned, the first thing that comes to people’s mind is gold or bullion. But aside from gold, there are other precious metals such as silver, platinum, and palladium. These metals are found in mineral ores located in different areas of the world.
Even though gold, silver, platinum, and palladium are generally accepted as currencies for trading, they also have other industrial uses. In particular, they play a vital role in investments and hold value in governments, banks, and other private sectors. This article will first explore the different types of precious metals broadly and how you can invest in them.
Gold
This is the historical champion among all precious metals and is also a great hedge against inflation. Although its price fluctuates all the time, gold has always trended in a positive direction. Investment in this precious metal especially in companies like https://goldco.com/ is a great safeguard in times when the currency weakens. It has an unstable political climate or you can say the market changes without warning. What’s more, you can always find gold available for purchase.
Silver
Just like gold, silver, and also tangible assets that you can consider investing in. It’s considered a legal tender in the United States meaning you can pay for goods or services with it. Silver is also used in various non-investment applications such as electronics because it is highly sought after. Although it is not as rare as gold, it’s still in continuous use for all applications. It’s likely going to drive its value up in the future.
Platinum
Platinum is more rare than gold and silver making it highly sought after for investors moreover the demand for this precious metal is skyrocketing because of its usage in the automotive industry.
Palladium
This is the rarest of all the four precious metals. It’s an extremely valuable element whose performance has space that of gold and silver. Due to its scarcity, it’s very hard to own.
Why Consider Investing In Precious Metal Companies?
Many investors consider companies that deal with precious metals as a safe space to store their assets, especially during economic, and geopolitical instability because the metals hold high value themselves.
In addition, these metals are used or are in demand in many industries because of their industrial applications. For example, as mentioned earlier palladium and platinum are important components used in automotive industries, and silver is used in the production of solar panels and batteries.
The clean energy transition required to meet net zero emission is forecast to increase demand for these metals. As supply is limited, this can significantly impact the prices of the metals which will benefit the companies that deal with them.
For instance, silver and platinum are increasingly proving to be key metals in energy transition. The demand for silver due to growth in the production of solar panels worldwide is in contrast with its availability.
Platinum as well is already experiencing deep deficits between mine supply and demand despite how it shows great promise in helping the world transit to net zero due to its use in hydrogen fuel cell catalysts.
However, this is the right time to invest in this element because the market has not yet caught on to this story, especially in the case of silver which is still tracking the price of gold instead of forging its part as an important mineral in energy transition. With this being said, You should keep in mind that the price of those minerals is volatile, particularly for silver and palladium.
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What Options Exist For Investing In Precious Metals?
If you are comfortable with the idea of investing in precious metals, you have two options:
- Buying shares in mining companies
You can invest in companies that deal with mining, refining, and trading precious metals. However, the prices of mining companies’ shares correlate to precious metals prices, their shares can be influenced by other factors like profitability, geopolitical risk, and environmental problems. Investing in this kind of company gives you the opportunity for capital growth particularly if the share prices increase alongside income in different forms of dividends.
You can online many mining companies but for starters here is a list of some of the largest global precious metals mining.
- Barrick Gold Corporation: headquartered in Toronto, Barrick is a major gold and copper producer, operating mines in 13 countries.
- Newmont Corporation: Newmont mines gold in addition to copper, silver, zinc, and lead. It’s headquartered in the US, with mines in Africa, Australia, and North and South America.
- AngloGold Ashanti: a South African company that produces gold, silver, and copper through mines in nine countries.
Purchasing funds
Funds are some of the money that you can buy that a company will manage on your behalf. There are two methods of managing funds active management where the manager’s purpose is to beat the benchmark by stock picking and passively managed ways to track an index.
In passive funds, You should expect to be charged 0.1-0.2% while in active funds it’s around 0.5-1.0. When it comes to precious metals, include Your options include:
Precious metal exchange-traded funds (ETFs) and exchange-traded commodities (ETCs) where the metals are held in physical form also to future contracts. You can select from exchange-traded products tracking the prices of gold, silver, platinum, and palladium individually. Actively managed funds are usually invested in mining companies, not the metal itself. If the metal price increases, it will have a positive impact on the value of the revenue generated by the companies.
Conclusion
As a beginner and precious metals investor, you want to have the necessary old knowledge that will give you an idea of what you’re trying to do. This is where this article comes into play, it has explained the known precious metals available why you should invest in them, and your options during the investment.