Precious Metals

Financial Dictionary -> Investing -> Precious Metals

Should You Invest in Precious Metals?

Precious metals, such as gold, silver and platinum, are commodities considered "non-traditional" investments, unlike stocks and bonds. Owning precious metals as part of your investment portfolio may further diversify your earnings as they tend to move in the opposite direction of stocks and bonds. However, investing in precious metals can be highly risky and speculative. The key is to know what you're getting into before you get into it.

If investing in precious metals appeals to you, there are several factors to consider before you take the plunge. First, which is the best investment? There are many to choose from besides the well-known gold, silver and platinum. For instance, consider palladium. Approximately half of the supply is supplied by Russia, the world's largest supplier. However, supply fell in 2007, causing a price jump. Palladium is a precious metal high in demand by some automobile companies such as Ford Motor. When the demand exceeds the supply, prices increase.

Next, if you've decided to invest in precious metals, you'll need to decide which investment route to take. You may want to buy mining stocks or, if you have an RRSP, you may start your own precious metals fund. Your best bet is to confer with a professional, have him peruse your investment portfolio, and advise you accordingly. If these two options do not appeal to you, you may want to become your own precious metals dealer. Be aware that there are minimum orders required.

Finally, there is a downside to investing in precious metals that you should be aware of. As in many aspects of the financial world, fraud is a possibility in the sale of metals and coins. If unrealistic claims are made such as that your investment will be resistant to market fluctuations, you may want to thoroughly investigate before purchasing. Be sure you research the best ways to invest in precious metals to gain a good understanding for your investment venture before you venture into it. Arming yourself with a good knowledge of the metals you intend to invest in and the companies offering them will go a long way toward your making a wise investment for your financial situation.