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In these times of economic uncertainty, investing in precious metals is a wise move. But with so many people rushing for the security that gold, silver, and palladium bring, how can you get the best deal and return?
There are a number of options when you are investing in precious metals. Below, we give you 7 tips for investing in precious metals along with 7 ways to do it.
1. Buy Physical Metals
The first choice is to buy physical metals. This can come in the form of bars, coins, or bullion. There are a number of precious metal brokers who can sell this, but you may have to work out how to store it.
It is not advised to just keep it lying around your home. Should anyone find out you have it, you may fall under the eyes of thieves and criminals. If you do want to store it at home, make sure you install a safe.
If you want to play it safe, then you can contact a metals storage company. They will take a down payment or charge a per year fee for securing your investment. Try to find a broker who offers free shipping for when you want to sell.
2. Open a Precious Metals IRA
An IRA is an individual retirement account. Many of these can be designated as precious metal or gold accounts. They will allow the custodian to buy and keep precious metals at a secure facility that is approved by the IRS.
The precious metal you add to the IRA can not be sold without incurring taxes. However, if you sell at the age of 59 this does not apply. Once you turn 70, your distributions become extremely minimal making it an excellent long-term investment.
Many brokers will have an IRA program. They should be able to assist you with any IRA rollovers and source your IRS sanctioned gold for purchase.
3. Invest in Precious Metals Stock
Buying precious metal stocks works the same as any other stock buying process. You are buying shares in a company that mines or processes precious metals, as opposed to simply buying the physical product itself. As such, when prices of precious metals fluctuate your stocks can go up and down.
Like any stocks, there is an element of risk involved. To minimize it, invest in companies that have contracts for future mining projects that are in secure, politically stable countries.
Risky investment opportunities may be in places where politics put a stop to gold production, or in remote areas where access is limited. However, these investments may just as easily bring the highest yield. Bear in mind this inherent risk.
4. Buy Exchange Traded Funds
An exchange-traded fund is a collection of stocks that are sold throughout the days trading. An ETF that uses precious metals, such as gold, will most probably be backed by physical assets. ETF gains are taxable at a rate of 28%.
Because of these high tax rates and the fees incurred, it is not usually viable to hold an ETF for a long period of time. They are best left for people who already have a wide-ranging stock portfolio that wish to capitalize on short term gains.
5. Invest in Precious Metal Back Crypto
Cryptocurrency is a very new idea, and crypto-backed by precious metals is even newer. Some people believe that it defeats the object of investing in precious metals. Others say that it will bring back a stable currency.
These currencies are known as stable coins. A stable coin is a cryptocurrency backed by a valuable asset, in this case, the precious metal. You are essentially investing in gold, silver, or other metals via its link to the cryptocurrency.
They should perform three main assets. They should act as a way to save, to exchange, and be able to function as a way of accounting.
6. Investing in Precious Metals Mutual Funds
Precious metals investment mutual funds often gain in popularity during times of economic uncertainty. This is because they are professionally managed holdings. They invest in a number of assets, processing stocks, gems, and mining both at home and abroad.
This means their overall profit is not linked to one dominating factor but spreads the risk over a number of income streams.
Different funds will operate in quite different ways. You may find some that invest wholly in physical assets, while others may focus on investing in foreign markets. The fund you decide to invest with all depends upon what they are and the amount of risk you are willing to take.
The beauty of a fund is that you can often find one that suits the level of risk you are willing to take. They are good for someone looking for a long term precious metals investment.
7. Hedging Your Money
A physical one-time lump sum is not so much about investing your money as protecting it. It involves playing both sides of the market so that fluctuations in the price of precious metals do not impact your investment. An investor will have neither a long nor short position.
Long positions are of benefit to the buyer when prices move up. Short positions are ones that benefit the dealer if prices decline. This investment will protect you against any sharp movements in the price of metals which may normally lead to large profit losses.
Once you have read the list and our handy hints, they begin your process of investing in precious metals by contacting a broker. They should be able to give you help, advice, and recommendations.
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