Investing in a Precious Metal Market – Worth it?

When investors talk about investing in a precious metal market, they usually talk about trading in Gold, Platinum or Silver. There are various types of precious metal investments. An investor can invest in the precious metal paper or they can buy physical metal. They can also invest in a precious metal mutual fund or exchange traded funds (ETFs). Every investment has its benefits and risks keeping in mind the experience of an investor in the market and the type of investment he has made. However, you should always ask Your Personal Financial Mentor  when you invest in a precious metal market because he can help you make a good and profitable financial decision.

When an investor purchases a physical precious metal, he buys himself an insurance plan to secure him from the downside risk of a portfolio. It is a rare commodity and hence, the price of a precious metal will always increase regardless of the economic conditions and market trends. It is unlike investing in a metal paper where there is a high chance of price fluctuation and investors are exposed to the high risk of loss. In a precious metal market, speculators play a vital role in creating a metal paper volatile market. When an investor invests in a metal paper, she exposes herself to a greater risk and all her life savings can be at risk, if she is unable to manage her portfolio efficiently.

In order to minimize the risk exposure, it is wise to invest in a precious metal mutual fund or exchange traded funds. By doing so, investors diversify away the risk of loss and can achieve a well diversified portfolio because these funds act as a pool of stocks for multiple precious metals. A fund manager invests the investor’s money into specific bonds and stocks and hence, further diversifies the portfolio. By investing in a precious metal funds, you will make a less volatile investment that will generate great profits in the future. It may not be as profitable as other investments in the precious metal market, but it can provide you great returns in the long run.

If an investor has a large portfolio of investments that consists of multiple asset classes, such as cash, foreign currency, bonds, stocks, real estate, oil commodity, and so on, then adding a precious metal can be another element that will help them achieve diversification. But if one does not have a significant amount of investments in their portfolio to minimize the volatility, then it is better to invest wisely when you are planning to invest in a precious metal market.

Categories: Precious Metals Market

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September 4, 2013 Investing in a Precious Metal Market – Worth it?