Benefits and Risks of Precious Metal Investments

benefits and risks of precious metal investments

Precious metals are just as valuable as assets today as they were in ancient civilizations, which is why they are still a wise investment choice. There are good reasons precious metals attract investors to diversify their portfolios, even when the economy goes through turbulent times. Precious metals’ value stays consistent, even against inflation and currency devaluation.

One smart way to invest in precious metals is in an individual retirement account — a self-directed gold and precious metal IRA, to be more precise. Before exploring the kinds of precious metals you can invest in, it is wise to weigh the benefits and risks of investing in precious metals.

Advantages and Disadvantages of Investing in Precious Metals

Investing in precious metals brings unique advantages compared to stocks and bonds. Because these precious metals are chemically unique, rare and easy to mold, they have been valuable for thousands of years.

Here are some detailed investing in precious metals pros and cons to help you decide whether this is something to add to your portfolio.

Benefits of Investing in Precious Metals

When everything else seems to be fluctuating, investing in precious metals is a wise decision to secure your financial future over the long run. Two common ways to invest are buying coins or bars and storing them in a safe place or purchasing exchange-traded funds exposed to precious metals or companies involved with them.

Why are precious metals a good investment? There are multiple benefits to adding these to your investment portfolio.

why are precious metals a good investment
  • Safe investment: Precious metals’ prices tend to remain steady over time, regardless of inflation or other economic factors.
  • Diversified and liquid: You can invest in various precious metal formats and easily exchange them for cash anytime.
  • Favorable tax treatment: Precious metals often provide lower tax rates than stocks, bonds and real estate.
  • Protection against inflation: The value of precious metals remains stable and even increases steadily, despite risks of changes in currency values, stock markets and inflation.
  • Ease of buying and selling: Because precious metals are tangible assets, you can physically trade with them.
  • Lasting investment: Precious metals retain their value. You can even pass them down to future generations.
  • Self-directed IRA options: Investors enjoy the approachability of adding precious metals to their IRAs to maintain control of their assets.

Risks of Investing in Precious Metals

The disadvantages of investing in precious metals are something to take stock of. Though they may have some degree of security, as with any investment, it may not be suitable for every investor.

What are the risks of investing in precious metals like gold? 

  • Storage cost: You will need to account for potential physical storage costs with this kind of investment.
  • Stock-based investment risks: Stocks related to poorly managed metal mining or manufacturing companies may risk losing money.
  • Price-related risks: Though the value of precious metals usually remains consistent, market fluctuations can still affect profitability.
  • Trading interruptions: In specific circumstances, disruptions can shift precious metal prices when trading resumes.
  • Identity theft: If you handle your investments online, there is always the potential for identity theft, which you can reduce by keeping your security and login details safe.
  • Quality issues: There may be quality issues with impure gold and silver, which you can mitigate by dealing with reputable sellers and obtaining documentation of value.
  • Investing in only one precious metal: By investing in more than one precious metal, you are more likely to reap the benefits, even when one goes through a dip.

Which Precious Metal Is the Best Investment?

As naturally occurring rare assets, precious metals are a wise investment. However, deciding which precious metal is best for your portfolio depends on your financial goals and the overall market outlook.

Here’s a brief guide to the top four valuable precious metals available for investment, by order of value.

1. Palladium

A shiny, silvery metal, palladium is one of the most valuable and rarest metals despite being lesser known than gold and silver. It has uses in industrial applications and manufacturing processes, especially as a crucial component in catalytic converters. Palladium is vital for electronics, medicine, dentistry, jewelry and chemical applications such as groundwater treatment. Compared to platinum, gold and silver, palladium is more sensitive to market changes.

2. Platinum

With its primary application in jewelry and the automobile and computer industries, platinum may increase in value in periods of economic stability. Since it is rarer than gold, the demand for platinum can also increase its value. Geopolitical conditions in the areas where platinum mining takes place also influence the price, making it the most volatile of all precious metals to invest in.

3. Gold

Often sought as a safe investment, gold has remained valuable for centuries. It has some industrial applications, but gold primarily has sentimental value when used as jewelry. It is also a form of currency. Supply and demand are less likely to affect gold’s value. However, the price drops when the need is lower. Gold performs especially well during times of inflation.

4. Silver

Silver is a close runner-up to gold as a precious metal investment choice. Its affordability makes it more broadly accessible to investors. Though societies have used both as currency, silver’s value goes through many more fluctuations than gold. Its industrial applications tend to create additional demand, influencing its price.

Even though gold may seem like the best precious metal to invest in right now, the best metal to invest in is a diversified portfolio of different types. If you are new to precious metal investment, gold and silver are good places to start. Eventually, you can add palladium and platinum to your portfolio to further diversify it.

Invest in Precious Metals With Accuplan

A well-balanced portfolio that maximizes benefits and mitigates risks is the best way forward. Those interested in palladium, platinum, gold and silver have many investment options with Accuplan. Whether you need expert advice on investing in precious metals or want to add authorized precious metals to your IRA program, we can bring you the best value with flexible investment options. We have the industry’s most straightforward and complete IRA programs with low fees and minimum complications.

For more information on the best ways to invest in precious metals, contact us at Accuplan or complete our online application form to start the process.

invest in precious metals with Accuplan

*Our information shouldn’t be relied upon for investment advice but simply for information and educational purposes only. It is not intended to provide, nor should it be relied upon for accounting, legal, tax or investment advice.

Subscribe to Our Newsletter!

Get industry related news, tips, tricks and techniques for alternative investing.