Precious metals are considered to be one of the best investment opportunities. They offer investors a stable, tangible way to store wealth and protect against inflation. Precious metal investing is not without its risks, though!
This post will discuss the process and 3 precautions that you should keep in mind before making any investments in precious metals.
First: The first one is that you should never invest your emergency fund in any form of precious metals.
The primary purpose of an emergency fund is to be available for those unexpected and urgent financial emergencies such as medical bills, car repairs, or home repairs. Therefore, it needs to stay liquid so we can access it fast when needed.
Second: The second one has to do with the storage option. You need a safe place where you will keep your investment until it appreciates enough.
Then, you can sell them for profit at market price or above market price if there are better opportunities out there that might result from higher costs due to an inflationary environment.
Again, there are several options, including bank vaults, safety deposit boxes, taking possession yourself by buying a house, or renting a unit just for this purpose, but all come with a cost.
Third: The next one is about market price volatility. The prices of gold, silver and other precious metals are highly volatile!
They can go up or down in a split second, which means there’s always some risk involved when investing money in this type of asset.
Choose Your Investment Plan Wisely!
This one is about the choice of the investment plan. First, you need to understand that there are two main options for investing in precious metals: buying bullion coins or bars.
The first option is considered a speculative type of investment, meaning its value will rely on what people believe these pieces of metal could be worth and not necessarily their actual intrinsic value, which may not reflect how much they should be worth at any given moment.
On the other hand, if chosen wisely, buying physical gold can also offer protection against inflation (and deflation), assuming this would drive prices up (or down).
We still think that keeping your money safe by having some tangible assets like real estate or even bonds will provide more protection than precious metals against a deflationary environment.
In conclusion, there are several precautions that you should keep in mind before making any investments in precious metals.
These were just few of the points. You can always do your own research before investing. I hope this article was helpful for you!