Basics of Investing in Precious Metals

Precious metals are defined as metals that are not commonplace but instead are rare and have an economic value that is high. Precious metals generally refer to gold, silver and platinum. The value of a precious metal is determined by a variety of factors including its use as an investment commodity, the rarity of it and its uses in industrial processes.  

Many people decide to invest in precious metals and are very pleased that they did so. Here we look at some important information regarding basic investing in precious metals.

Precious metals are defined as metals that are not commonplace but instead are rare and have an economic value that is high. Precious metals generally refer to gold, silver and platinum. The value of a precious metal is determined by a variety of factors including its use as an investment commodity, the rarity of it and its uses in industrial processes.  

Many people decide to invest in precious metals and are very pleased that they did so. Here we look at some important information regarding basic investing in precious metals.

The primary precious metals of gold and silver are often thought of as being the “grandfathers of investing.” Platinum came onto the scene much later. It was the hoarding of these metals that led to the birth of brokers and markets. Precious metals are often thought of as being the one type of investment (besides land) that is able to hold onto its value in the short term even if there are fluctuations in the market. 

While you would not want your portfolio to contain only precious metals investing in a certain percentage of them can be very smart for any investor. To start you need to know how to buy precious metals. The majority of precious metals can be bought as coins or bullion (certified bars). They can also be purchased as a “contract.” What this means is that one person is presented with the right to purchase the precious metal in a specific quantity.

Gold is the most popular precious metal to invest in. It has a long history, it is the basis for a number of currencies throughout the world and it is the standard International Monetary Fund which makes it highly valued as a commodity. Gold tends to be volatile when it comes to price fluctuation due to the fact that it is the most actively traded precious metal around.

Gold is measured by grams and by what is known as troy weight. When you hear the term carat this refers to the percentage of actual gold that exists when it is alloyed (combined with other metals to decrease the base-metal content).This must be done because gold is a very soft metal in its natural form. Gold is commonly used in the dentistry industry, the electronics industry and jewelry.
The second most popular precious metal to invest in is silver. Silver is used in many areas including coins, photography equipment, jewelry and tableware. Silver has a very high electrical and thermal conductivity which makes it very valuable in the world of engineering in comparison to other precious metals.

The measure of silver is very similar to that of gold. It is commonly traded as coins or what are known as ingots. An ingot may sound like an unusual word. It is defined as “A metal that is cast in the shape of a block for easier and more convenient handling.”

Another precious metal you may wish to invest in is that of platinum. This precious metal is the late bloomer or the baby of the group because it was not discovered until the new world was discovered by European explorers. Platinum is considered to be more precious than gold although it has yet to reach the same level of popularity.

Platinum is used in a variety of industrial settings because it is immune to corrosion. Another reason is because of its catalytic properties that come naturally to it. It is also used in dentistry, jewelry, manufacturing, electrical contacts and automobile emission control devices.