Precious metals have always been a crucial part of a diversified portfolio, and the importance of these assets will only grow as the world’s economies continue to teeter on the brink. So how much should you own? There is no simple answer—but we’ll try to make it easier by breaking it down into a few questions.
#1. Precious Metals Currency
Precious metals have been used as currency for thousands of years. They were used for trading amongst early civilizations and are still used today. These days they are the preferred currency of most countries around the world. One form or another, they are accepted in almost every country. While their value is subject to market forces like any other currency, it tends to be a much more stable and less volatile form of money than paper or digital currency.
#2. What is the “Right” Amount to Own?
For starters, the U.S. mint’s current bullion coins are expected to be discontinued by the end of 2015, while several new coins will be introduced in 2016. But you should also have no trouble finding bullion coins in other countries—if you don’t care about making a quick buck on the open market, that is.
#3. Should you Look for Silver or Gold?
Gold is the most common precious metal and has been the standard for monetary value for thousands of years. Only in the 20th century did countries begin to adopt a dual-currency system, where paper money is issued to complement gold as a store of value. And even then, some countries adopted fiat currency first.
#4. Would you Instead buy Coins or Bars?
So how much should you own? Simple: as much as possible. That doesn’t mean you should dump all your money into any old bullion coin. It’s essential to understand how precious metals work—and why they’re different than stocks like Apple or Exxon.
#5. What are the Best Ways to Invest in Precious Metals?
Maintaining a diversified portfolio is one of the most effective ways to hedge against inflation (and other risks). While there are countless ways to skin a cat, two basic principles remain true: diversification and patience. Diversification is one of the essential elements of investing. Even if you’re choosing investments based on the long-term potential, remember that it’s impossible to know if a particular sector will outperform in the future.
Gold and silver are both rare but have unique characteristics and functions. Take storage, for example: while a safe deposit box may hold gold or silver coins or bars, it’s not as secure as other strategies. However, your choice of precious metals may depend on your reason for owning them. For example, if you plan to sell them to a coin or bullion dealer, you’ll want to hold gold coins or bars instead of silver. There are many ways to liquidate your assets—but you should always invest in holding onto precious metals for the long haul, even if the price is lower.
#6. Storing Precious Metals at Home
You can store precious metals at home quickly enough. However, make sure that you’re keeping them in a secure location. You can buy specialized storage devices or keep them in a safe deposit box. The choice is up to you, but make sure you’re keeping them secure in either case.
#7. Richest Precious Metals Owner
One famous owner of precious metals is Queen Elizabeth II. She inherited around 3.2 million ounces of gold (worth more than $120 million at current prices) as part of her British Crown Jewels collection when she was queen. She still owns a large amount of gold today and is considered one of the wealthiest women in the world.
#8. Precious Metals Jewelry
Jewelry made with precious metals has a long tradition that dates back thousands of years. Some of the first examples of jewelry were made with gold and silver, although other materials and precious stones were also used to make jewelry back when all you needed was a hammer and an anvil to get started. The tradition also continues today, and it’s easy to see why.
#9. Buying Precious Metals Jewelry
There are several different ways to get your hands on precious metals jewelry. For one thing, you could go directly to manufacturers and jewelers and buy jewelry you like. Another option is to go through a broker or financial representative who can buy the jewelry for you and then sell it when you’re ready to purchase something else.
#10. Find a Financial Representative
If you aren’t particularly interested in holding your precious metals or if you don’t have enough money to buy physical forms of the metals from trusted dealers, then another option is to hire someone else to handle your investments for you. They can sell the metals for you, buy them from you, and then sell them again. It’s a convenient option, especially if you don’t have the time to manage your investments.
While there’s no simple answer to this question—and precious metals are only one piece of a diversified portfolio—it’s essential to understand why these assets are different than stocks like Apple or Exxon. Your ultimate goal should be to buy as much gold and silver as possible, then maintain a diversified portfolio using bars or coins at face value.