Investing in metals has always attracted the attention of people seeking to preserve and grow their capital. Gold, silver, platinum and palladium are historically considered as safe haven assets, especially in times of economic instability. And when you decide to invest in them you may have reasonable questions like "how to start?". Which forms of investment are suitable for beginners and which ones for experienced market players?
If you are still far from the world of metals, but, for example, you are interested in coins and even already know some nuances and have ever wondered how much is a 1940 nickel worth or what other historical or valuable coins are worth buying, then this article will also be useful to you. Today we are here to talk about the main forms of investment, give you tips on how to get started and tell you what to look out for to avoid pitfalls.
Metals - A Promising Asset
Metals have unique characteristics that make them an ideal asset to invest in:
Preservation of Value: Historically, gold and silver have maintained their value over the centuries. For example, an ounce of gold in 1920 could buy a nice suit, and that statement still holds true today.
Diversification: Metals are not directly correlated to the stock markets, making them a great way to reduce portfolio risk.
Inflation Protection: With inflation on the rise, metals, especially gold, serve as a safe haven for capital.
Stability in crises: during global crises such as the COVID-19 pandemic or the 2008 financial crisis, the value of gold has shown growth, protecting investments.
Interesting fact: During the 2008 global financial crisis, the value of gold rose by 25% while many stocks collapsed.
Understanding the Forms of Investment
There are several ways to invest in metals, and each has its own characteristics. The table below summarizes the main forms of investment and their key characteristics.
Form of investment | Description | Advantages | Risks and disadvantages |
Bullion and coins | Buying physical metal in the form of bullion or investment coins | Reliability, liquidity, no dependence on stock markets | High cost of storage and transportation |
Jewelry | Investing in gold or silver products | Beauty, wearability | High markups for manufacturing, low liquidity |
ETFs and funds | Purchase of units of funds investing in gold, silver and other metals | Convenience, liquidity, no storage costs | Dependence on stock exchange fluctuations |
Futures | Contracts to supply metals in the future | High profitability with a proper strategy | Risk of significant losses in case of price fluctuations |
Metal stocks | Purchase of shares in companies that mine or process metals | Dividends, long-term growth of value | Risk related to the company's operations and industry problems |
More Details on the Most Popular Options
Bullion and coins
This is the most classic and one of the most reliable ways to invest in precious metals. Gold and silver bullion bars and coins such as the American Eagle, Australian Lunar Series and Canadian Maple Leaf are the most popular. These can be easily bought and sold through banks (for bullion) dealers or auction houses (for coins). However, it is important to remember that when buying, you must consider premiums over the market price of the metal, which can vary depending on the rarity and condition of the coin.
ETFs and funds
For those who don't want to get into the business of physically holding metals, ETFs such as SPDR Gold Shares (GLD) or iShares Silver Trust (SLV) are great. These funds allow you to invest in metal without holding it and are ideal for portfolio diversification.
Futures and Jewelry
An instrument more suited for experienced investors. Futures allow you to make large profits, but are associated with high risk due to the volatility of metal prices, so you should buy them with caution if you understand the situation.
As for jewelry, they are often chosen by novice investors as a form of investment but it is important to remember that the cost of manufacturing greatly reduces the investment appeal of this option.
Closer to Investing: Detailed Recommendations
The first step towards successful metals investing is to clearly define your goals. Ask yourself why exactly you want to invest. If your goal is to protect capital against inflation, more stable assets such as gold will suit you. If you want to create a long-term asset to preserve and grow your money, gold bars or coins are a great choice. And for those looking to diversify their investment portfolio, adding silver, platinum or palladium can be a great strategy.
Once your goals are defined, it is essential to choose the right metal. Gold remains a top favorite among investors due to its stability and safe haven status. It is the best option for those who want long-term capital protection. Silver, on the other hand, is suitable for more active investors as it is subject to greater price fluctuations, allowing for potentially high profits in a short time frame.
Example: The price of silver is up over 40% in 2020 due to demand in the electronics and solar industries. Platinum and palladium, due to their limited reserves and active use in industry (e.g. in the production of automotive catalysts), have high growth potential.
The next important step is to choose a reliable supplier. It is best to cooperate with proven dealers such as APMEX, Kitco or JM Bullion that have a long history and good reputation. Avoid little-known vendors, especially those who offer suspiciously low prices.
The last but not least step is to verify the authenticity of your investment. Use modern tools, such as the Coin ID Scanner app, to make sure that, for example, the coin matches the stated characteristics. Due to the app you may check the authenticity of popular coins and learn more about the examples you want to buy or collect.
Additional Tips and Prospects for Your Attention
Even experienced investors are not immune to mistakes that can significantly reduce the return on investment or lead to losses. Understanding common mistakes and how to avoid them is key to successful investing. Consider the three most common mistakes made by beginners and even those who have been working with metals for some time.
Mistake 1: Buying from unreliable sellers
Overly tempting prices can hide fakes. For example, Chinese fake coins have flooded the market in recent years.
Mistake 2: Ignoring storage costs
If you're investing in physical metals, consider the costs of storing them. A home safe or renting a safe deposit box can significantly increase the total cost of ownership.
Mistake 3: Misunderstanding liquidity
Metals have high liquidity, but their speed depends on the form of the asset. For example, coins and bars are much easier to sell than jewelry. So, it is better to focus on versatile assets that are easily traded in the market.
Metal Market Outlook
Is it worthwhile to understand the nuances of investing in metals now or “the train has long gone” and it is better to look for something more promising to invest in? Metals remain a strategically important asset. For example:
In 2023, central banks purchased 20% more gold than the previous year.
Estimated metal price growth projections (2025-2030)
Metal | Average growth forecast | Main growth factor |
Gold | +6% | Geopolitical instability |
Silver | +12% | Demand in electronics and solar power industry |
Platinum | +8% | Automobile production |
Palladium | +10% | Limited inventories and industrial demand |
Time-tested Investments
Investing in metals is a bridge between the past and the future, a way to protect your capital from inflation and economic turmoil. To succeed, start with small steps, choosing assets that align with your goals. Remember to study the market and use modern tools to authenticate and assess the condition of metals. And let every gram of gold you own, every coin or bar, be a sure step toward financial stability and confidence in the future.
