Precious Metal Investments

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Precious Metal Investments

The most popular precious metals chosen as an instrument of savings and capital growth are gold, silver, platinum and palladium. In 2022, investors should pay attention and invest in precious metals like gold and silver. It is in 2022 that each of these metals has its own advantages, which are based on their investment properties and applications.

Gold, like other precious metals, is an anti-crisis and anti-inflationary asset. Precious metals have high liquidity and can be an independent means of payment. Therefore, interest in it increases during crises and international conflicts.

Precious Metal Investments

In 2020, when the world was on the verge of a global crisis, gold had increased in price by 20%. At the end of May 2021, inflation in the United States reached a record level since 2008 – 5% in annual terms. Given that the US national debt has exceeded $28 trillion, and the money supply in the country with the largest economy in the world has increased by almost a third since last year, we should expect further inflation and an increase in the price of gold. In Russia, the annual inflation rate has already exceeded 6%. Producer prices are also skyrocketing in China.

Gold and silver have a significant investment disadvantage – their storage does not bring money, but requires expenses. Income from investments in physical gold can be obtained solely from its resale, which is also associated with high costs. You are also unlikely to be able to sell physical gold at a market value. Spreads (the difference between the selling and buying rates) are quite large – in banks and can reach 5%. Therefore, the purchase of physical gold and silver is in most cases a long-term investment.

The second minus of gold is that most of it in the world is used exclusively as a store of value. About a third of the mined gold is used to make jewelry, and 6-8% goes to industrial needs. Everything else is ingots, coins, medals, etc.

Silver, unlike gold, has found wide application in industry – over 60% of the total world production. Therefore, it is considered the second most important commodity of the economy after oil. Silver is used in the production of solar panels, batteries, electronics, etc. These areas are developing, and the demand for silver is also growing. Over the past 12 months, the price of silver has risen by 62%.

How to invest in gold and silver to get the maximum?

There are several ways to invest in precious metals:

  • Purchase of ingots, jewelry, coins.
  • Purchase of gold on the stock exchange (including in physical form).
  • Purchase on an unallocated metal account.
  • Purchase of shares of mining companies.
  • Acquisition of securities of mutual funds focused on precious metals.
  • Acquisition of shares of ETFs (exchange-traded funds) that invest in precious metals, precious metals indices or shares of mining companies.

In order to get the maximum return on investments in gold and silver, and at the same time not to freeze your money for many years, it is recommended to purchase shares in mining companies, as well as purchase ETF securities or mutual funds. Stocks are more attractive because they generate annual dividend payments. And the shares of mining companies are growing at a faster pace than gold or silver.

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