Thinking about expanding your horizons and adding some diversity into your investing portfolio? Not sure how to go about it without getting into too much of a risky situation? This article may just have the information that you have been looking for! Let me explain.
Off the top of your head, I want you to think of some of the riskiest possible investments that you can make right now. Personally, my thoughts drift towards some of the online ventures. This includes cryptocurrency and NFTs (non-fungible tokens) in particular.
Why are they so dangerous, though? A large facet of that is that for the most part, they are unproven in the long-term. In fact, it is pretty much impossible at the moment to guarantee that either will be long-lasting parts of our society.
On the complete opposite of the spectrum, let us think about what has been proven. Bonds definitely come to mind. Since they are backed by the government, we will hope that those agreements will always be honored. What else is there?
It is precisely that very question that I am here to answer. While the topic of precious metals can get complicated, there is certainly no reason to fear it. With all of that being said, let us dive right in!
What Qualifies as a “Precious” Metal, anyway?
A fair warning: inherently, this subject is a bit complex. I will be discussing some chemistry with you, so just try to follow along! Hopefully, I can keep it as simple as possible – a lot of the other articles online are far too difficult to digest.
The first thing to know about them is that they are considered chemically inert. Therefore, they do not have reactions with other elements on the periodic table. Instead, they form alloys rather than combining with those other elements. That is a big deal because it is what allows them to remain “pure” during the manufacturing process.
In addition to this, it is a good idea to remember that they are fairly rare to find in nature. Since they are not abundant, they are inherently more valuable in terms of supply and demand. There will never quite be enough supply to fulfill that demand since it is a limited resource.
The four main ones that we can focus on are gold, silver, palladium, and platinum. The latter two are both in the “platinum” family, but they are given the distinction because of their different purposes during the industrial process. Palladium is mostly used in cars, since they help to filter out the carbon from exhaust pipes.
Just know that there are some common alloys of these metals which is how a lot of the “lower quality” items are made from it. Simply put, they are not going to have as high of a value. They can still look pretty, though.
Classification Terms to Know
Now, if you are serious about wanting to invest them, there are some phrases that you are going to want to familiarize yourself with. The classifications are important, especially when determining worth. Thankfully, though, there are only three that you really need to concern yourself with for now, and resources like goldinvestingcompanies.org can offer some aid with getting to know them.
This is the way that we measure the percentage of a certain precious metal in any alloys it is in. The higher that percentage, the “purer” the piece is in terms of that metal. This is important in coins especially, since there are restrictions on those based on the fineness when you are looking to add them to a tax benefit retirement account.
Admittedly, this measure is fairly similar to the one above. However, it is specifically in reference to gold. Try not to get them mixed up. After all, people do not exactly refer to something as “24 karat silver.” Instead, it would be “24 karat gold.”
The go-to way to measure the weight of a metal is by using the troy ounce. Interestingly enough, though, the phrase dates back several centuries. The difference between this and a normal ounce may be nominal to some extent, but it is still a huge part of this industry.
What to Expect from the Gold Market
To conclude our discussion today, I want to focus entirely on gold for a little while. I do this because it is the typical way that investors get their start in this market. It is certainly the most popular precious metal, and there are good reasons for that. Its durability, malleability, and conductivity are just a few of them.
Now, a post like this one can easily supplement the information I am going to tell you, so feel free to check it out once I have finished. If you are trying to buy gold, there are usually five types that you should be on the look out for. There are some positives and negatives to each of them in terms of value, so it will be up to you to decide what you would prefer to purchase.
The first is gold alloy. It is pretty simple, since it is just that element that has created an alloy with some other element. Generally, most consider it to be the “standard.”
Then there is rose gold (most of us are probably familiar with the familiar tint by now). The element that it has alloyed with here is copper. Copper is what brings about that rosy sheen.
White gold has alloyed with platinum, bringing about that bright white color. Because there are two precious metals involved, it is often thought of as being quite valuable. This alloy makes for gorgeous jewelry pieces.
Fine gold is the pure element on its own. More often, this will be depicted on the bullion that you purchase. Look for a marker of “999.”
Finally, there is yellow gold. Despite the moniker, it is a combination of gold and silver. All are viable selections.