In the world of investments, there are a lot of people who are a little bit scared to put their money back into the stock market. Even though the stock market has rebounded and reached new highs, there is a general uneasiness that it is being propped up by inflationary policies, smoke and mirrors. Because of this, many investors feel that it is a good time to get involved in precious metals. Why should you take any of your portfolio resources and put them into precious metals like gold and silver? Here are a few things for you to consider about this form of investment.
The Economy Isn’t as Strong as Some Say
In the last few years, much of the media and supporters of the current administration point to all kinds of indicators that say the economy is recovering. They say that the worst is behind us and that everything is rosy again. For example, they’ll point to the record high level of the Down Jones Industrial Index as an indicator of this. They say that inflation isn’t that bad and that everything is under control. However, in reality, there are some major issues with these figures as economic indicators.
Although the stock market is currently up, this is not an indication of how healthy the economy is. Record numbers of companies are laying off employees and closing locations around the country. Big companies like Barnes & Noble and Best Buy are closing hundreds of stores because of a lack of retail sales. Internal company memos at the biggest retailer in the world, Wal-Mart, show that sales were a “disaster” in the month of February.
The consumer price index that is consistently referenced when economy apologists talk about the recovery is greatly flawed. The “core CPI” that they use does not take into consideration the price of gas or the price of groceries. Considering these two costs make up the bulk of spending in most monthly budgets, its difficult to justify not including them in an inflation figure. The costs of these two items have bone up significantly in the last few years. The cost of a gallon of gas has nearly doubled in the last four or five years. This has an impact on many different areas of the economy, and shows that everything isn’t quite as rosy as what they might have you believe.
The value of the dollar continues to be eroded with the policies of the Federal Reserve. The Federal Reserve is a quasi-governmental organization that has complete control over the money supply. Every time they increase the supply of money available, they decrease the value of the dollar.
Why Precious Metals?
So what exactly does all of this mean to you as an investor? It tells you that it might not be time to bet on the current financial markets and traditional forms of investment. When the economy is struggling and the bottom falls out of the stock market, a lot of people are going to be struggling financially. One of the best ways to combat this issue is to own precious metals like gold, silver, palladium, and platinum. When the value of the dollar decreases, the values of hard assets like precious metals increase. When you have your money in theoretical securities like stocks or bonds, they don’t have any inherent value. They don’t increase in value when the value of the dollar goes down.
Owning precious metals gives you some protection against these inflationary policies. No matter what happens in the financial realm, precious metals are always going to have some kind of an inherent value. They’ve been valued in every society to some degree. Precious metals are limited as well. Central planners can’t just create more gold or silver like they can with paper money.
Another nice thing about buying precious metals is that they could be used for bartering or trading purposes at some point as well. If the financial system were to collapse somehow, you’d still have your precious metals that you could use to barter with other people. This isn’t the case with other types of investments. There’s something special about owning a physical asset that you can use for other purposes besides just holding in your portfolio.
How to Invest in Precious Metals
When you want to invest in precious metals, there are multiple ways that you could accomplish this goal. One option that you have is to invest in funds that hold precious metals as part of their portfolio. For example, precious metals exchange-traded funds that are traded on the stock market hold many different types of metals. This type of fund is attractive because it makes it possible for you to speculate on the price of precious metals without actually buying any.
Another way to invest in precious metals is to buy stocks of mining companies. This isn’t a direct way to speculate on the prices of precious metals, since other factors determine the profitability of the company. However, when precious metals prices are high, the profits of the mining companies are obviously higher than normal.
The most direct way to invest in precious metals is to buy them and hold them yourself. With this approach, you buy coins or bars and warehouse them yourself. Then when the price of a precious metal goes up, you get to realize it directly. You also don’t have to rely on anyone else to trust your bullion to. When you invest in funds or companies that hold your metals for you, then you have to trust them quite a bit. Some companies have been known to sell the same metals over and over again, without actually giving customers what they pay for.
Buying Precious Metals
When you are ready to buy precious metals on your own, the process can seem a bit intimidating. You’ll need to find a good source for precious metals. One of the factors that you should look at is the spread that you’ll pay for buying these metals. The spread is the amount that the broker or dealer charges for providing the precious metals. Every broker or dealer charges a different amount for this.
One of the best sources for precious metals is Monex. Monex is a precious metals dealer that makes it possible for you to buy a number of different products. For example, you can buy many different sizes of gold, silver, platinum, and palladium bars and coins. This makes it possible for anyone, regardless of budget to invest in precious metals. Once an investor makes a secure purchase, the precious metals can be shipped directly to you.
When you are looking for a company to buy from, make sure that you are working with a reputable company that has been doing this type of business for many years. You need to look at the spread, shipping charges, and any other fees that may apply. This way, you’ll be sure that you’re getting a fair deal and that no one will take advantage of you along the way.
Investing in precious metals now seems to make a lot of sense from a long-term perspective. The policies of the central banks around the world are realistically not going to change any time soon. Their only trick is to keep printing money, keep inflating, and keep getting rid of the value of the dollar. Since precious metals tend to have an inverse relationship to the value of the dollar, this means that the value of your metals is going to continue to go up. If something catastrophic happens to the economic system, then the value of your metals will skyrocket like they did during the last financial crisis. Even if nothing significant happens, the values of these metals are going to continue to steadily climb over time. This means that it’s a smart investment, no matter what your opinion of the financial system is for the long-term. Either way, you’re going to come out on top.
If you’re not quite sure about putting a big portion of your money into precious metals, it makes sense to at least get started. The nice thing about precious metals is that you could get started buying one coin or one bar at a time. Then as you discover the value of putting money into these securities, you can continue to put more and more of your money into them. Before long, you’ll have a big chunk of your money in precious metals, and your wealth will continue to grow. There may be some bumps and bruises along the way as the value of these metals slowly trends upwards. However, if you’ll stay the course and continue growing the percentage of your portfolio that is in precious metals, you’ll be much better off than when you first began. The long-term prospects of investing in precious metals look very promising. Just make sure that you have a safe place to store all those precious metals.