Benefits of investing in precious metals
There are numerous benefits of investing in precious metals, as opposed to relying solely on bank savings or an employer-sponsored retirement plan. Traditional savings accounts are limited in their savings potential, especially for those who are investing for the long term. While most banks offer a variety of savings plans including high-interest savings accounts, these plans are limited in terms of the amount that can be saved each month. The same is true for 401k plans, which are limited to a certain percentage of your earnings from your job. Both of these types of savings plans are poor choices for investing, especially in the long term.
Instead, investing in precious metals is a good alternative, as they offer a higher potential rate of return, as well as long-term security. The following are the benefits of investing in precious metals.
Gold and silver are monetary metals
Gold, silver, platinum, and other precious metals are used as a medium of exchange, a form of money, because they are useful in industry and technology, and have fungibility, the ability to be divided without changing the nature of the divided units. Gold and silver are used in the construction of all kinds of technology including electronics, computing, aerospace, and medical. Silver has been used for centuries in the production of mirrors and telescopes and continues to be used for that purpose as well as in electronics, making solar panels and LED lights. Gold is widely incorporated in computing equipment and medical devices because of its conductivity. Gold and silver are widely used in the construction of all kinds of technology, making computer chips, medical devices, and other electronics.
Gold and silver have intrinsic value
The value of gold and silver is derived from their usefulness as a medium of exchange and store of value, not just because they are rare. If the demand for gold and silver should decrease, as has happened in some historical periods, then the relative value of gold and silver would also decrease, leading to a decrease in their value compared to other types of investable money.
The U.S. Mint prices gold at $1600 per troy ounce and silver at $17 per troy ounce because these are the prices at which people purchase them in large quantities for investment or for the Mint to produce coins at the mint price of $17 per troy ounce.
Gold has industrial uses
Gold is useful in a wide variety of industries from electronics, to medicine, and construction. Gold also has a relatively stable value compared to other types of commodities, making it useful in industries that are affected by inflation like healthcare. Gold can also be used to make jewellery and ornaments, and in the construction of buildings and vehicles.
Gold has been used as a hedge against inflation since ancient times
Gold has been a hedge against inflation since ancient times because it is a finite and rare metal, making it easy to store and guard against the possibility of theft. Gold is also difficult to counterfeit, making it less susceptible to fraud. In addition, the dollar has been devalued over the years, making it less valuable, making the gold value more important.
Gold and silver are easy to store
Storing gold in a Mint-issued coin or in a gold IRA, or silver in a IRA, allows you to make your gold or silver easily accessible for use even if the physical gold or silver coin is stuck in the bottom of your closet.
Storing gold or silver in a safe deposit box, or in a bank or credit union gold or silver account will require a monthly fee or a guarantee fee against theft. However, if a thief were to steal the gold or silver from the safe deposit box or bank account, there is no recourse to retrieve the gold or silver.
Investing in precious metals has long-term returns
When investing in precious metals, the long-term returns are typically lower than investment returns from stocks or bonds. However, precious metals have the potential for high returns when compared to short-term investments, such as those made in a bank savings account whose rate of return is likely to decrease for the duration of the investment.
Investing in precious metals has the potential for high returns
The potential for high returns is based on the potential of the price of gold and silver to increase in value, along with the potential for inflation. In the past, when the price of gold has risen significantly, it has been viewed as a sign of inflation and a currency that is losing value.
Investing in Precious Metals has the potential for high risk
Investing in precious metals carries high risk because the price of gold and silver can fluctuate significantly, sometimes rising quickly, but also falling quickly. The price of gold can move 10% in a day or 30% in a week. If you purchase gold or silver as an investment, it is important to understand that buying one ounce of gold or silver can be very expensive because of the increased supply or the decline in demand, leading to a decline in price.
Precious Metals Investment Summary
The benefits of investing in precious metals are numerous, including higher potential long-term returns, the ability to store wealth in a limited supply of gold or silver coins, and the ability to hedge against inflation. The risks of investing in precious metals include high risk due to large price fluctuations, as well as the possibility of losing value if the price of gold or silver falls in the short term because of increased supply or a decline in demand.