Gold, silver and platinum are precious metals that are coveted by investors. They serve as a portfolio diversifier, hedging against inflation and political risk while offering capital gains when they rise in price. They are also considered a store of value and can be used as a form of insurance against natural disasters, wars and other economic turmoil.
Investing in Precious Metals: What to Consider
Precious metals are available to invest in a number of ways, from exchange-traded funds (ETFs) and mutual funds to mining company stocks. Getting involved with these investments requires some research, as different options may suit different investment goals and risk tolerances.
ETFs: These are a popular way to get exposure to gold and silver without the responsibility of owning or physically storing physical precious metals. However, these ETFs have some drawbacks: They are taxed as collectibles and don’t benefit from lower long-term capital gains rates.
Miners: Shares of companies that mine precious metals tend to rise and fall in line with the underlying metals prices, but they carry different risks than investing in a precious metals ETF or fund. They could experience cost overruns, mismanagement, or financial issues that could cause their shares to underperform the price of the underlying precious metals.
Closed-End Funds: These are a common way to gain exposure to precious metals, but they have additional fees and can be more volatile than buying shares of a mining company. Some closed-end funds are taxed differently than a stock, so be sure to consult with your accountant on any potential impacts.
Leveraged ETFs: These are a type of exchange-traded product that birch gold group is designed to leverage the movement of prices in underlying precious metals. They are a convenient and liquid option for some investors, but their leverage may be unsustainable over time.
Purchasing Physical Metals: Bars and coins are the most traditional way to buy precious metals, but they have a few drawbacks. For one, they can be costly, with manufacturing and distribution markups and storage and insurance costs. They also have limited liquidity, as they’re largely traded during business hours.
If you’re interested in acquiring physical precious metals, look for a reputable dealer or bank that offers secure and insured storage facilities and can provide full disclosure of fees and charges before you commit to an investment. The physical market is less regulated than the online or electronic markets, so there’s more potential for fraud and scams.…