5 Things To Know Before Investing in Precious Metals

For years, investors have always picked an interest in precious metals. Despite the wide range of investment opportunities today, precious metals are still a favorite investment opportunity.


For people looking at leveraging this investment, this article highlights some important things every beginner needs to know.


Different kinds of precious metals

Gold, Silver, and Platinum are the three most popular precious metals.


Gold is durable and used in making jewelry. It is also used in making certain dentistry and engineering tools. The value of this shiny yellow metal is determined by the market 24/7 and is less affected by the demand and supply fluctuation.
This is because, despite hoarding by some owners, the new mine supply is sufficient to sustain the market. The price usually increases when these hoarders decide to buy more, thus reducing the gold in circulation more.


The price of silver is more likely to fluctuate when compared to gold. This is because, aside from the use of silver as a hedge against inflation, it is used in many industries such as photography, medicine, and engineering. Batteries and micro-circuit manufacturers also make use of silver.

This heavy usage significantly affects its availability and market control; thus the volatile pricing.

Silver can be owned as a coin, future, or investment in an exchange-traded fund (ETF) that owns silver.


Platinum is another precious metal widely traded across the globe. This metal is rarer than both gold and silver. It sometimes beat gold to the grand-daddy spot of precious metals. However, its heavy industrial usage, just like in the case of silver, affects its prices.

Platinum is widely used in the automobile industry. It has been observed that demand in this industry significantly affects its market price.


1. Ways to invest in precious metals

There are three major ways to invest in precious metals. Either as paper, physical or digital.

Investors of paper precious metals are provided with paper such as gold certificates signifying investment worth. This paper can also be presented in digital forms such as a scanned PDF sent to an investor’s email or an online file that can be viewed when logged into an authorized account on a platform.

This form of precious metal ownership is not advisable. You cannot trade the papers for the actual precious metal.

Physical precious metals can be touched and you have more control over them. You are also responsible for its safety. Experts recommend this type of investment as the best. If you want to invest in antique silver coins, for instance, all you have to do is visit a reputable seller’s site to purchase one.

2. Research the authenticity and reputation of the chosen seller

First, be on the lookout for random calls proposing investment in precious metals. Most of these salesmen are pushy. You deserve enough time to think before deciding to invest.

Whenever you decide to invest, only patronize reputable sellers. This is more important for investors interested in physical gold. There are a lot of scammers selling fake gold and silver out there.

Employing the service of an expert to help confirm the authenticity of the precious metal may help. There are also test kits that can be used to verify gold or silver authenticity. They are readily available in jewelry stores, walk into any to borrow one.

3. Storage and insurance costs

As stated earlier, investing in physical precious metals requires taking responsibility for their safety. Before making the purchase, it is recommended you buy a safe/vault to keep your investment.

Some investors prefer storing it at a depository. This storage incurs annual charges in addition to insurance costs.

4. Volatile pricing

It is possible to record loss in precious metals investment. It is like any other investment opportunity but comes with its own peculiar risk and advantages. When the government for instance decides to continually print money leading to inflation, precious metals' value significantly increases. It is a sure way to protect wealth in such instances.

5. Avoid selling at a local store

When you decide to exchange your physical precious metal(s) for cash, avoid selling at local pawn shops. Bullion retailers are sure to buy at a premium, unlike a local coin shop that will buy to resell to the bullion retailers. However, if the price offered by the local pawn shop exceeds the price the metal was purchased, then it is a good deal.

How to determine the best time to buy precious metals

Just like any other investment, before buying precious metal, it is important to check the market trend. Precious metals are the best buy when there is inflation. Also, study charts of price over some time.

Buy, when the price is low over a long period. A spike can be expected after a while.

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