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What's is Metals Investing

Jun 30

When it comes to precious metals investing, investors face a wide range of options. Deciding why you want to invest (inflation hedge, diversification, profit potential) and what metal(s) and investment vehicle you choose will depend on your investment thesis and risk tolerance. Each option comes with its pros, cons and costs 66 or more.

Precious metals have historically been used to preserve wealth, but today they also provide a valuable hedge against economic uncertainty and volatility. They have proven their value as a store of value, and can offer protection against rising inflation and weakening local currencies. Their scarcity and value make them a valuable alternative to more traditional investments such as stocks and bonds.

Money Metals performs best among the major precious metals, and many investors consider it a core asset for their portfolio. Silver, on the other hand, is cheaper than gold and has a long history as a monetary currency. It also has many industrial applications, which can influence prices in different ways from other metals. Investors can buy physical gold and silver, or invest in a variety of other vehicles such as futures contracts, ETFs or stocks of mining companies or streaming firms.

ETFs (exchange-traded funds) are one of the most popular ways to gain exposure to gold, silver and platinum without the hassle and expense of storing and insuring physical bullion. These funds can be actively-managed or passive and track the price of gold, silver, platinum or a basket of those metals. However, they are not as liquid as the underlying assets and can often trade at premiums or discounts to their net asset values. They also have fees and taxes that must be considered.

Physical metals, on the other hand, can be traded on the spot market, where you buy or sell at a current price. Bars and coins generally cost more than their weight in the metal due to manufacturing and distribution markups, as well as storage expenses. You also must pay taxes on any gains from the sale of these metals, which may be a consideration if you are holding them for financial or personal reasons.

Mining stocks and funds can be another way to gain exposure to the cyclical and non-cyclical drivers of gold, silver, platinum and palladium. However, these shares are more volatile than those of other sectors and carry additional risks like liquidity risk. Investors should always carefully read a prospectus and consult with their tax advisor to determine the appropriate vehicle for their individual situation.