One of the biggest questions new investors of precious metals ask is what to buy.
The first rule is to avoid numismatic or collectible coins and the significantly high premiums that dealers usually charge for them. Below, we provide a guide to investing in precious metals.
Which Metal Should You Buy?
At the moment, silver looks somewhat undervalued in relation to gold. However, with some compelling supply and demand fundamentals, it looks like silver is set to outperform gold in the medium to long term.
That being said, during periods of uncertainty, gold will always outperform silver and always proves less volatile. Gold is a safe haven and gold portfolios prove to be the most profitable and steadiest of all.
Palladium and platinum are also good investment opportunities if you’re looking to diversify. Platinum’s price per ounce is still below golds and looks especially inviting. But, keep in mind that both palladium and platinum tend to trade more like industrial metals, so your investment is essentially a bet on improvement and stabilization in manufacturing.
Here are a few general guidelines:
- If your priorities are safety and wealth preservation with lower risk and volatility, buy gold.
- If you want greater potential appreciation and wealth preservation, buy silver.
- If you want to diversify your portfolio, buy palladium or platinum.
What’s The Purpose Of Your Investment?
Many buyers build up their portfolio for some of the following reasons:
- Diversifying cash
- Long-term appreciation
- Barter and trade potential
If your goal is to hold for the long term, give priority to finding low premiums. In terms of a bull market for precious metals, the ounces you own will actually produce the investment returns. So, the lower the premium, the more ounces.
It’s also important, according to experts like GoldBuyersMelbourne.com.au, to keep the marketability of what you buy in mind, since you’re likely to want to sell. It’s wiser to avoid 1,000-ounce silver bars, for example, as they carry low premiums and may well be discounted when it is time for you to sell.
If you have self-directed precious metals IRA, concentrate on low premiums, as they tend to orient towards long-term appreciation.
Don’t Trade In And Out
When it comes to short-term trading, try to avoid trading in and out of your core holding of precious metals. Remember that events in the world can move markets quite suddenly and unexpectedly, so you should never risk giving up your core position in such an environment.
Keep Your Transaction Costs Low
When choosing the best bullion for trading, focus on keeping your transaction costs as low as you can.
Think About What You Like
Finally, the buy-sell spread is usually low and doesn’t really vary much from one bullion to the next. But, you’re bound to pay a little more for, let’s say, American Eagle coins over other types of gold or silver. Luckily, you can expect to get more for them when you’re ready to sell back. Just remember that the premiums on them aren’t that likely to rise as much as the actual metal.