Before answering the question posed, let's look at some interesting facts about precious metals:
- For over a century, the United States dollar was indeed backed by the precious metal, gold, even though dollar coins were often made from silver.
- Banks utilize Tier 1 assets to continually make money off of the money that we give them through our deposits. Along with using our money to purchase as a tier 1 asset to grow money tax free, Global central banks have been on a net buying spree of unprecedented proportions of physical gold, since 2010 and for every single year into 2020. This has been the largest gold buying exercise ever seen in modern history and in 2019 the Bank of International Settlements (BIS) re-classified Gold as a Tier 1 Asset within the global financial system.
Precious metals are rare metals that have a high economic value. This high value is based on factors like scarcity, high demand in industrial processes, and their function as a store of value. For investing purposes, the four most common precious metals are gold, silver, platinum, and palladium.
- Gold - Gold distinguishes itself from other metals by its tensile strength (i.e., it does not rust or corrode), malleability, and ability to conduct heat and electricity. It has some industrial applications in dentistry and electronics, but it is best known for its use as a base for jewelry and as a form of currency.
- Silver - Half of all silver is used in heavy industry and high technology, including smartphones, tablets, automobile electrical systems, solar-panel cells and many other products and applications, according to the World Silver Survey. As a result, silver is more sensitive to economic changes than gold, which has limited uses beyond jewelry and investment purposes. When economies take off, demand tends to grow for silver.
- Platinum - Like silver, is primarily used as an industrial metal. It's essential for the automotive industry, which uses it to make catalytic converters that help reduce emissions from vehicle exhaust. In addition, the petroleum and refining sectors and the computer industry use platinum. Some jewelry is also made out of platinum. Given its rarity, the metal holds some investment value, although not to the same extent as silver or gold.
- Palladium - Palladium is another precious metal with important industrial usage. Palladium is a shiny, silvery metal and it is used in electronics and industrial products, dentistry, medicine, chemical applications, jewelry, and groundwater treatment. While rare and highly valuable for those purposes, investors don't put as much emphasis on palladium as they do on other precious metals.
Precious metals offer unique inflationary protection. They have intrinsic value, carry no credit risk, and cannot be inflated. That means you can't print more of them. They also offer genuine upheaval insurance against financial or political/military upheavals.
From an investment theory standpoint, precious metals also provide a low or negative correlation to other asset classes like stocks and bonds. This means even a small percentage of precious metals in a portfolio will reduce both volatility and risk.
If you prefer to maintain a low-risk investment portfolio, precious metals such as gold and silver are worth considering. Over the years, both metals have been suitable choices as safe-haven investments. The term refers to precious metals that offer investors stability when an economic crisis occurs. Even when the economy plunges into an undesirable state, the value of gold stays the same or even rises on certain occasions. Additionally, gold and silver aren’t subject to any government influence, allowing these precious metals to hold their value.
One of the main advantages of investing in precious metals such as gold and silver is the high liquidity. Unlike with other forms of investment that can take time to sell, there are always eager buyers when it comes to precious metals.
With all these advantages listed thus far in reference to investing in precious metals, you must be thinking that there has to be some type of disadvantage to investing in precious metals. The primary disadvantages are that precious metals don't produce any cash flow like a profitable business or even an interest-paying bond does. Instead, they just sit there, as you hope they go up in price at which point you can sell it at a profit. The other disadvantage is the price fluctuations on the value of the precious metal. If an individual holds the outright metal, there can also be a storage cost associated with the investment.
Although gold has proven itself to be the best precious metal investment as we look back to it previously backing the US dollar and the fact that it is a tier 1 asset for banks, your portfolio can also benefit from other precious metals. The key to success with them is to understand your objectives before diving in. Precious metals investing is an effective way to accumulate wealth, but be sure to perform your due diligence.
- Buy the Physical Metal - Buying gold or silver coins, bars, etc. This gives you a physical asset you own outside of the traditional financial system. And it takes away the counterparty risk of investing. This simply means that other investments are subject to the risk of another party failing to meet their obligations.
- Invest in a Precious Metals Exchange -Traded Fund (ETF) - Buying physical metal has limitations. One of which is that investors need a way to store the metals. This makes exchange-traded funds (ETFs) an attractive option. The primary advantage to investing in precious metals via an ETF is liquidity. Simply put, you can buy and sell shares through your brokerage account. It’s a convenient method. However, a disadvantage to investing in precious metals through an ETF is that you don’t own the physical metal and you have no claim to the physical metal owned by the fund.
- Buy Shares of Mining Stocks - A third option is to buy shares of companies that are involved in the mining of precious metals. This is a “picks and shovels” way to invest in precious metals. However, like investing in an ETF, you are not taking ownership in the physical metal.
If you are interested in building your legacy and owning physical precious metals at wholesale prices like a bank does instead of paying the mark up from retail precious metal brokers, here at Family For Life Insurance we provide access for you to do just that.
Our precious metals are provided at wholesale prices by a Numismatic Guaranty Company (NGC®) authorized dealer. The NGC is the world's largest and most trusted third-party grading service for coins, tokens and medals.
On top of that, we are also a North American Collectibles Association Member.
You will have access to:
- 20% off auto ship access
- 30% discounts on gold & silver metal coins, bars, and collectables purchases
- Free Vault Storage
- Cash back rewards on purchases
- 100% buy back guarantee when you are ready to sell
- Each month your membership feeds 2 starving children
Start your precious metal investing journey by clicking the link below: