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3 Important Questions You Must Ask Yourself Before You Start Investing in Precious Metals

Sep 16, 2020

Daniel Friedman

Investing can be tricky. Depending on what commodity or security you are buying or selling, there are attributes inherent to that transaction which could make your trade uniquely different from some other investment.

This means in many cases you have to ask yourself specific Questions before you start investing or trading, to ensure you enjoy the best possible experience.

In the case of investing or trading precious metals, there are at least 3 things you absolutely must know before you get started. It is a good idea to keep an investing journal where you not only handle bookkeeping duties tied to your precious metal investing, but you also list your detailed answers to the following questions and refer to this information frequently.

1 - Why Am I Investing in Precious Metals?

Some people like the "cool" factor of buying precious metals.

They may buy a little gold or silver every now and then, and these people often carry gold or silver coins with them wherever they go. They like showing their metal to their friends, and they are getting involved in 1 – precious metal buying more as a hobby than as a means to trade a commodity in the hopes of realizing a profit.

The majority of the folks who buy and sell precious metals, in Either paper or physical form, do so for a couple of reasons. They want to 1) realize a profit at some point in time, and/or 2) they are purchasing a hedge against an economic collapse. You may decide to purchase precious metals as a retirement fund vehicle, or so that you have a rare and valuable commodity to pass along to your children or grandchildren.

Whatever your reasons, make sure you are crystal clear on why you are investing in precious metals.

2 – What Metals Will I Buy?

During much of 2018, one Troy ounce of .999 fine gold sold for close to $1,200. If you purchased a gold bar like you see in the movies, that is 400 ounces, so your investment would be somewhere around $480,000 plus whatever premium you pay just for one brick. In 2018, you could still purchase an ounce of silver for less than a $20 bill in many cases.

Money may be a consideration when you choose which metals you will buy. Gold and silver are the most commonly traded precious metals, so you will always be able to unload your physical or paper investments in a reasonable amount of time. Platinum and palladium are two other precious metals which are traded on stock exchanges, and you can purchase physical palladium and platinum products.

However, moving platinum and palladium investments, whether they are physical bars or ETF shares, may not be as easy as trading gold and silver.

Keep these considerations in mind when you decide what metals you will be buying.

3 – Where Will I Store My Metals?

If the hobbyist example mentioned earlier suits you, storage may not be a problem. You may want to show off your collection, and you probably won't need an entire room to hold the precious metal bullion and coins you will be purchasing. If you plan on making a sizable investment over time, or you just want the safest possible storage, you may want to consider renting depository storage space from your dealer.

You can of course purchase a safe you keep at your home or place Of business. There is no end to the number of in-floor, in-wall, and standalone safes which offer fire protection and other security benefits.

You may additionally talk to your banker about renting a safety Deposit box, but this will usually mean you are going to have limited Storage space.

These are just 3 important questions you should ask yourself before you get started investing in precious metals. Review your answers over time.

It may be that your ideas about investing change, and the way you answer these important precious metal investing questions may also change.