Investing in precious metals is expensive but it is among the low-risk high reward investment class. For centuries we have relied on gold and silver as wealth generators and these two precious metals continue to hold sway not just among small investors, but also among institutional investors. Here are 5 questions to ask when investing in precious metals.
1. Physical or non-physical?
There is the option to invest in physical bullion like ingots or coins or non-physical bullion forms such as exchange-traded funds, bonds, or digital certificates. There is advantage and disadvantage to owning precious metals in all three forms, one must look at what is convenient for them and the investment goals before making the purchase.
2. How much will the premium affect me?
Physical precious metal bullion investment has a premium cost attached to it which raises its price by a small percentage over and above the spot price of the precious metal in the market. Depending on whether one invests in gold, silver, palladium, or platinum, whether one purchases coin or bar, and the weight of the bullion, the premium rate will be determined. Physical precious metal investment is lucrative for the very long run as the prices increase gradually. The bullion premiums are priced in such a way that one will not make any profit on reselling.
3. How can I take delivery of my precious metal?
There is the option to purchase precious metal directly by visiting the store or by shopping from gold dealers online. If you visit the store, the product will be packed and hand-delivered along with a receipt and package for storing the coin or bar that you have purchased. If the purchase is made online, then the product will be shipped to the given address in a discreet package that is fully insured through reputed courier services. One has the option to have their physical bullion stored in secure bank lockers or bullion lockers with larger dealers. However, if your investment is in gold bars or coins, or silver bars or coins weighing less than 500 grams, then one can store it at home.
4. Is my asset liquid?
The liquidity of your investment depends on the size and type of metal you have invested in. Smaller-sized gold bars and coins are easier to sell than heavier gold bars. This applies to all precious metal bullions. Also, due to the overhead premium paid on the physical bullion, in the short run, even if the spot prices are high, it may not cover the premium rates. Yet, one can easily sell their assets with any reputed dealers and get returns on them immediately.
5. Which precious metal should I invest in?
Among precious metals, there are gold, silver, platinum, and palladium. Although platinum and palladium are not as well-recognized as gold and silver, they do command a strong market demand and thus experience wide price fluctuations, making them lucrative investment options.
Irrespective of which precious metal you choose to invest in look for legitimate dealers to carry out the transaction to get the best value for your investment.