Many investors have generated high profits using precious metals investments. This is usually done using a variety of financial trading instruments including commodity ETFs, and mutual funds and common stocks, along with options and futures, bullion and certificates.
For the major leading precious metals, exchange-traded funds (ETFs) are available. This type of trading in the precious metals market including making purchases and sales of gold, palladium, platinum and silver is both convenient and liquid.
Mutual Funds and Common Stocks
It is simple to purchase precious metals miners’ shares as an effective way to leverage the price movements of gold, palladium, platinum and silver. However, mining stocks are valued differently than the spot prices of the precious metals. Because of that, it might be a wiser decision to stick to purchasing and managing funds or physical assets that have more of a solid performance record.
Options and Futures
Both the options and futures markets offer leverage and liquidity to investors that want to take a big chance on winning big in the precious metals market. Precious metals investments using options and futures can generate the largest potential profits for the investor, along with the greatest losses. Through derivative products, investors can take a dubious chance on winning or losing big.
Purchasing bullion bars, coins and rounds is by far the leading way to become involved in precious metals investments. Owning the physical assets is ideal for investors that have a place to store the bars and coins. Many of these investors often expect the worst in worldwide economies, the devaluation of currency or the collapse of markets. That being said, owning the physical asset is a great tool to use when necessary to convert into cash, or store away as a long-term investment solution.
Owning precious metal certificates provides investors with a variety of benefits much like physical ownership of gold, palladium, platinum or silver. However, it comes without the need for storage or transportation. For the investor that needs to have the physical asset, certificates are nothing more than just paper that backs up the value of gold or silver, palladium or platinum. In times of misfortune and economic uncertainty, investors should not expect anyone to exchange them for anything that has value.
The four leading precious metals including gold, palladium, platinum and silver have their own intrinsic value. In fact, they carry absolutely no credit risk. They have no way to be inflated (no more can be generated by simply printing it). They have long been recognized by the central banks as a genuine form of “upheaval insurance” against any type of military/political or financial/economic turmoil.
From a strictly precious metals investments standpoint, gold, palladium, platinum and silver also offer negative or low correlation to all of the other tradable asset classes including bonds and stocks along with real estate. What this means is that even a low percentage of holding precious metals in a diversified portfolio can significantly reduce both risks and volatility.
Precious metals investments offer an effective and useful way to diversify any investment portfolio small or large. However, the trick to achieving a high level of profitable success when obtaining and managing gold, palladium, platinum or silver is to understand the risks involved and the goals that need to be accomplished before becoming involved.
The minimal volatility involved in long-term precious metals investments can easily be harnessed and managed. When properly handled, the four leading precious metals can help accumulate wealth to load up the treasure chest. However, when left unchecked it can easily lead to the demise of the entire portfolio.