Precious metals are defined as metals that are rare and have a high economic value. This value can be due to various factors, including scarcity, hedging against inflation, and each type of metal’s role and value over time. The most popular precious metals to invest in are gold, platinum, and silver.
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What They Are
Precious metals chemically tend to be less reactive than other elements. They usually have a high luster and are somewhat pliable. Historically, these metals were important as currency but are now mainly used as investments and to create industrial materials.
Precious metals are often used as an investment tool to diversify portfolios and maintain value, primarily as a hedge against inflation and during times of market uncertainty. They may also be an essential component for products such as jewelry and electronics for commercial buyers.
How to Invest
When it comes to precious metals, inflation is a common word to watch for among investors. Buying them now at their current prices protects their value against future inflation, which makes them ideal investments.
There are several different ways for investors to begin in precious metals markets. Those wishing to purchase and hold the metals directly can purchase physical bullion. These can then be stored in a safety deposit box.
Other popular methods of investing in precious metals include buying futures contracts for a certain metal. Purchasing shares in publicly traded companies in metal markets is another option. Exchange-traded funds (ETFs) and mutual funds also offer a variety of strategies, including funds backed by bullion, portfolios of mining companies, and leveraged exposure.
More About Precious Metals
There are eight metals that are considered precious. They are gold, silver, palladium, platinum, ruthenium, rhodium, osmium, and iridium. There are two metrics commonly used to determine the most precious metal, price, and rarity.
The best-known precious metals are coinage metals, consisting of gold and silver. These consistently generate lots of attention from the financial media, as well as market participants.
How Precious Metals are Valued
The level of purity varies based on the item. “Three nines” (99.9%) purity is common. The most mass-produced bullion coins of this purity are in the Canadian Gold Maple Leaf series, which go up to 99.99%. The Krugerrand is an example “pure gold”: it must contain at least 12/11 ounces of at least 11/12 pure gold. Other bullion coins like the British Sovereign show neither the purity nor the fine-gold weight on the coin but are recognized and consistent in composition and purity.
Other precious metals include the platinum group: ruthenium, rhodium, palladium, osmium, iridium, and platinum, of which platinum is the most widely traded and rhodium is the most expensive.
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