How To Invest In Gold and Silver

Silver, gold, and other precious metals have been associated with wealth and prosperity for centuries, and even today, many investors choose these precious metals as the centerpiece of their investment portfolios. Suppose you are considering adding precious metals to your investment portfolios. In that case, you will need to know the basics of these precious metals and fully understand why they are so valuable.

Here we will cover some of the basics any investor should know about investing in these precious metals.

Gold

We will begin with gold because gold has been the most coveted metal since time immemorial.

Gold is shiny and will remain shiny forever because it doesn’t rust, corrode or tarnish. It is also highly malleable and the perfect conductor for heat and electricity. Gold even has industrial applications in countless human industries, from dentistry to nanotechnology. Of course, most commonly, we find gold in the high-value jewelry industry.

The value of gold is not affected much by the same dynamics that affect other commodities on the market. Supply and demand will not affect its value because the gold mined right now is outweighed by the massive amounts of gold investors have hoarded. The price of gold will drop when a hoard of gold is sold, but when newly mined gold is bought, it is quickly absorbed into the market, and value is driven back up.

Here are some of the top reasons that gold is such an excellent option for investors seeking to hedge their wealth from the fluctuations that affect other markets.

Systemic financial concerns — when the banks are unstable, political unrest seems imminent, or the value of paper money is dubious, gold can be purchased as a safe way to store personal value.

Inflation — as inflation can decrease currency value, gold is a suitable investment option that will retain its value.

War and political crisis — civil unrest is another good reason to buy gold. A lifetime of carefully cultivated wealth can be converted into this high-value asset and kept portable and storable. It can then be used to purchase foodstuffs, transportation, or begin a new life in a new location.

Silver

Silver is another valuable asset that acts a bit differently than gold on the markets. This is because silver plays an important role not only as a stockpile of wealth but as an efficient industrial metal. For this reason, the value of silver is far more volatile than gold.

So even though there are good reasons to invest in silver to diversify wealth, it is also subject to the supply/demand exerted by the industries that require silver. This price can be expected as new demands are made of silver. For example:

The advent of the digital camera has eliminated silver in the photography industry that placed high demands on this precious metal for producing silver-based photographic films.

Many electrical appliances and medical products require silver for everything from silver bearings, batteries, superconductors, micro-circuitry to electrical components. This has made silver a critical commodity.

The critical thing to remember is that silver’s value is greatly affected by its applications and not just its use in fashion.

Key Takeaways

Diversifying one’s investment portfolio with precious metals is a great way to protect wealth from a crisis. Gold seems to perform this function very well, but silver is also a good option for investors to consider. In addition to purchasing precious metals in bar, bullion, or coin form, they can also be accessed through derivative markets and even mining company stocks.