Every investment expert you might have come across will advise you to include precious metals in your investment portfolio. Adding precious metals in the investment portfolio is not as easy as it seems to be. Before you add precious metal to your investment portfolio, you are to understand the potential returns as well the risk involved. To help you to make a better investment decision on precious metals, here is a handy guide on how to choose the best precious metal to invest.
What are Precious Metals?
Before we start restructuring our investment portfolio, let us first know the most common precious metals in which we can invest our hard earned money. People around the globe invest mainly in three metals- Gold, Silver and Platinum.
The gold investment is one of the oldest investment vehicles which is popular till the date. Gold is metal which is shiny and yellow in colour. The gold is basically used in ornaments and as a form of currency. It has some industrial use in dentistry too. Gold has unique qualities such as it doesn’t rust or corrode and it conducts with both heat and electricity.
The price of gold is determined by the 24-hour market fluctuations. The gold trades are much influenced by sentiments than the ratio of demand and supply. For example, in India, gold prices seem to inflate during the festive season and marriage season.
Here are the Factors in Support of Investing in Gold
Systemic Financial Concerns
Gold investment is believed to be the best way to maintain value during times of political unrest and when banks and money are perceived as unstable.
One of the best ways to tide over the inflation is investing in gold. The Inflation can hinder the return of equity, bond or real estate markets but the gold will ever maintain its value.
The Warlike Situations or Political Unrest
During the warlike situation and political upheaval, if it is needed to move from one place to another, one can easily transfer the gold to a safer place. Gold is ever welcomed by investors for being portable.
The next precious metal to invest in is silver. Silver is less expensive than gold but the usage of silver is much higher than gold. There is plenty of practical use of silver. Silver is used in things like mobile phones, batteries, computers, solar panels etc. The demand, as well as the price of silver, is increasing constantly from the last few years. The increased demand for silver is a positive sign for investors.
The ever-increasing demand of silver may cause a scarcity in years ahead. In such a situation, a swift increase in price will be a common situation. If the supply deficits, the investors can liquefy the savings in silver for a really high return. In such situations, one can earn more profit by investing in silver than investing in gold.
Factors that Make a Silver Investment a Better Choice
The first and foremost positive point in investing in silver is that it is cheaper in cost. The price of silver is much lower than gold and platinum. The lower cost makes silver a better choice for small investments.
The next reason for investing in silver is that the demand for silver is increasing and the supply is decreasing. If you check the demand & supply graph of silver in the last decade, you will find a constant growth of demand but the supply is decreasing. Till the date the supply of silver in decreasing in slowly but if the supply gets a significant drop, the prices are certain to be increased. So it makes sense to invest in silver at present.
More Industrial Use
The industrial use of silver is increasing day by day. Hardly we can spend a day without using products which has silver. Silver is used in batteries, medicines, photography films, ornaments, mirrors and glasses, engines, water filters, chemical productions etc. The more and more usage indicates more demand which makes silver good to invest in.
The platinum is the next precious metal which one can invest in. Platinum is greyish in colour and sometimes mistaken as silver while using as jewellery. Platinum is widely used in the manufacture of jewellery. Beyond the ornamental use, this metal is used in the auto industry too. Platinum is one of the rarest metals available on earth hence the prices are always steep. The platinum mines are found only in two countries- South Africa and Russia. The platinum prices are decreasing since last a few years hence experts believe that this is the best time to invest in platinum. The chances of rising demand for platinum can be can be foreseen in the ornament industry globally. Once the demand increases, the investment in platinum will fetch a really high return.
Why Should You Invest in Platinum
The supply of platinum is limited in the global market. The supply of platinum is significantly less than silver and gold. Investing in platinum makes sense as in future the supply may be stopped entirely. So you can invest in this metal as it still available in the market.
The demand for platinum in increases in both industrial and investment. The people who want to invest high amount, opt for platinum. Along with ornament and automobile industry, new uses of platinum is being discovered which is good news for the investors.
Which Metal is Best for Investment?
This is one of the most common and of course tricky questions of investors who are interested in investing in precious metals. Well, to give an ideal answer to this question is not possible as the best metal to invest may change according to the market dynamics. If you want to earn a profit without much risk, let your investment be diversified among all metals. Above all, before you invest, you must go through deep research in past performance and the future potential of the metal which you want to invest in.