There seems to be a lot of whispers going around these days about the current state of the economy. These concerns are well warranted with QE infinity propping up the market. Many feel this inflated market is all just an illusion and the writing on the wall is to get their money out.
Individuals and families across the board are already struggling to make ends meet with the inflated costs of everyday essentials. Food prices alone have skyrocketed just within the last couple of years. People can no longer afford risky investments in things that may not pay off.
Why are people sprinting towards precious metals? The problem with fiat currency is that it is based purely on confidence. Therefore, governments can use whatever material they choose to produce the currency. Paper would otherwise be worthless since it actually holds little to no intrinsic value. In other words, it’s a very expensive IOU.
Precious metals on the other hand, are very difficult to mine for. They also have a great diversity of products they can be made into. From this combination, they have historically made the best currencies the world has ever seen. With paper the same cannot be said. It isn’t worth very much without the confidence factor, and these days economies across the world are quickly losing confidence from the people.
Why invest in precious metals?
Precious metals have always been a great hedge against the dollar to begin with. It’s always been a good idea to keep some of the assets backed by precious metals. As previously mentioned, people are also beginning to see the bigger picture with fiat currency and the government’s out-of-control spending habits. This is cause enough to begin investing a little more carefully, and may even be reason enough for those who are already into metals to start increasing their holdings. Of course, this isn’t the only reason to invest in metals.
Others look at it more from a hobby standpoint. To them it’s a great feeling to have a rare metal from the earth in their possession. In fact, coin collecting is a huge business. This comes simply from the fact that many people like to collect those metal coins. Other hobbyists enjoy making their own jewelry, or shaping the metals into other products. It’s not always purely about the monetary value. It’s also a great hobby.
What types of precious metals are the best?
The earth is absolutely covered in metals. Some are more readily accessible than others. This accessibility along with unique characteristics and versatility all account for the value of the particular metal. For instance, metals like steel and iron, although versatile, are also readily available in abundance. Therefore, these metals aren’t worth that much today. Things do change quickly though. It’s important to remember that the price of metals, much like stocks, fluctuate on a daily basis due to supply and demand.
Other metals such as gold, silver, platinum, and palladium are on a serious climb. They all meet the requirements for precious metals that are in hot demand. They are all difficult to mine for with limited deposits. These metals have historically been used to produce a wide array of products as well. They’ve been used as currency, jewelry making, art, medicinal use, and even weapons. It’s their use as a potential currency, however, that has spurred a new rush to claim these items.
Gold is probably the most recognized precious metal on the planet. There’s a reason why they always call it a gold standard. It’s extremely versatile due to its soft, malleable character. It’s also a very attractive metal to most people.
As far as value is concerned, think about this. In January of 2009 gold was trading at roughly $875 an ounce. Just three years later it was trading in the $1620 range. That’s an over 85% increase just within a few years. Some are calling for a correction, but as long as people continue to lose faith in the dollar there may be no brakes on gold. Of course, that was an unusual climb during that three year stint, but it still today shows little signs of stopping while the dollar continues to fold up shop.
Gold is sold in a variety of forms, although the bullion and coins seem to be the preferred methods of purchasing it. Coins will generally have an added value simply because of the production costs. Bullion is usually sold at market price in a more raw form. It’s important to make sure that the buyer is dealing with a credible trader, however, to avoid any of the numerous scams out there claiming to be selling gold.
Silver is another popular precious metal that has been used for thousands of years as both a currency and for a huge variety of man-made products. It’s been used in everything from silverware to weaponry. Bluebloods have even claimed health benefits by drinking from silver cups.
It’s more commonly found than gold, although nuggets of pure silver are pretty rare. Instead, silver is often mined as a by-product from lead ore. Silver currently has the potential for a huge upswing, and many in the industry are predicting just that. Silver typically tracks gold at a fifteen to one ratio. If this holds true then silver has a huge bull run in front of it.
Investors and hobbyists alike have enjoyed collecting silver. It’s certainly a valuable metal, but doesn’t come with the hefty sticker price that gold does. This makes it a worthwhile pursuit even for the most frugal of investors.
Platinum is certainly another highly sought after metal that has its own unique characteristics. This is another chemical element much like gold. It carries the symbol Pt on the periodic table. It’s one of the rarest finds in terms of metals pulled from the earth. Nearly all of the world’s production of platinum can be found in South Africa.
Platinum has been used for jewelry, electronics, dental equipment, and even car parts like catalytic converters. The metal is highly resistant to corrosion, which certainly helps the price of it. It has a similar color and shine to that of silver. Whichever one is shinier has certainly been open to hot debates, and is probably better left to the eye of the beholder.
One thing is for certain, however, there is a drastic difference in price from that of silver. Currently platinum futures are looking great too. Most metals are on the rise these days, but the sticker price on platinum keeps it out of the reach for many investors. Traditionally, it’s traded well above the cost of gold. However, in recent years it has even dipped below the gold price for the first time in well over a decade. Rumors have it that supplies are also short coming out of South African mines. For those who can afford to play with this metal, they could be in for a much bigger bank account in the not-too-distant future.
Lastly, palladium is yet another chemical element found on the periodic table with the symbol Pd. It’s a rare find that also shares a similar color with silver and platinum. It’s a lesser known precious metal in comparison to the others, and is considered more of an industrial commodity. The biggest producers of palladium are Russia and South Africa.
Palladium is also used in many of the same products as platinum including car parts, medicine, and has even found a home in creating fuel cells. While it shares very similar characteristics with that of platinum, and is even a member of the platinum group metals, it typically trades for a lot less on the market.
Currently palladium is trading in the $790 range. Like gold, it’s a little tougher to predict what palladium prices might do. However, rumors of palladium supply shortages have also been floating around the industry lately.
In the end, there are plenty of reasons to pull out of the market and into precious metals. There are also many different metals to get into for those who are cautious about their money. While the list above is some of the most valuable metals on earth, it is still far from complete. A good way to get started is to find a metal that’s within the budget and study it consistently. When the price feels right then it’s time to hop in and get the feet wet. Start off with small amounts that can be afforded if lost. Always remember to use a trusted source to trade with. Monex.com is one of those trusted partners. Traders at all levels can use them to purchase high-quality gold, silver, bullion, platinum, palladium, coins, and other precious metals. Stick with the industry standard in Monex.com.