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Guide to Investing In Precious Metals – Pros & Cons

Austin Fairley, December 20, 2021December 20, 2021

You’ve probably heard it said over and over again that it is wise to invest in precious metals like gold and silver goldco review. However, the truth is that the precious metal is not a simple, one-time and made investment. Many variables must be considered at the time of purchase.

Investors are generally divided on whether or not to invest their funds in precious metals. Some investors do not trust the global economic system and their portfolio is made up almost entirely of precious metals. Others believe that no portfolio should have gold or silver allocated.

To help you decide, we created a guide with tips on ways to invest in precious metals, including some of the pros and cons. This guide focuses on physically investing in precious metals, although we will cover other types of investment, such as exchange- traded funds   (ETFs), later in our series.

Pros:

  • In general, metals such as gold or silver effectively maintain wealth in the long term, although they can become very volatile. Some additional benefits are:
  • No credit risk.
  • They maintain its global purchasing power over a long period of time through the devaluation of the currency or inflation.
  • Precious metals are not closely correlated with bonds, stocks, or real estate.

Cons:

  • Commodities like precious metals do not produce cash flow and their value can change unpredictably.
  • Transaction costs are associated with investing in precious metals:
  1. If you buy physical gold, the company in the middle makes a profit. They buy it at wholesale price, convert it to investment grade gold, and sell it at retail price.
  2. Shipping, security and storage costs exist along with the risk of theft or loss.

Make the decision to invest

It is easy to defend or not the investment in precious metals. However, there are case studies that show that investing in a precious metal could help you get through a financial crisis. For example, during the economic crisis in Greece, bank withdrawals were limited to € 60 per day. Greeks would have to wait long lines to withdraw small amounts of cash. In cases like this, having some gold put away can be incredibly useful.

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