What to Know When Diversifying Into Precious Metals?

Juliet D'cruz

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What to Know When Diversifying Into Precious Metals

Glittering and beautiful, precious metals are always interesting in the eyes of many people. Investors who are planning to diversify into a different asset may find gold, platinum, silver, and palladium to be a great investment. After all, they still remain valuable for centuries, and they don’t directly correlate to the movements of the stock market.

When you know where to invest and how to get started, your confidence can increase. There are a lot of metals that you can invest in, and here are some of the options that you can start with.

Gold – This is one of the most valuable out there, with gold bars and coins getting higher demands when the stock prices are falling. It does not corrode, and its shaping capability makes it valuable to a lot of industries. See more about this metal on this page here.

It can be anywhere such as in electronics, dentistry, jewelry, and currencies because this metal has been considered as a store of value. It can be used as a hedge when the prices of commodities are rising, and many people find it as a safe haven for their funds whenever there’s economic turbulence or political upheaval.

Starting your investment journey with gold may mean purchasing valuable jewelry pieces, opening a self-directed IRA where you can deposit IRS-approved coins and stamped bars, and getting into stocks related to the ingot. If storage is a problem, try investing in mining companies, royalties, and exchange-traded funds and see what the market can offer.

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These options have their pros and cons, so it’s better to start searching for qualified professionals who can help you open a gold account for your needs. With a veteran owned precious metals business, you can expect resources, support from knowledgeable staff, and legitimate dealers that can help you navigate the complexities of the industry.

About the Gold Standard and Where It Ended

Emerging countries started to print their currencies in the 19th century, and this is where the standard had begun. Each currency is backed by a bar deposited at some government vault somewhere, and so they remain valuable.

Nations have held more than sufficient amounts of bars and coins to make sure that citizens can exchange their fiat money for precious metals if they so wish. However, this ended in 1976 when President Nixon took the dollar off the gold standard, and others followed suit. 

Today, metal is hugely seen as an investment vehicle. Even in the face of inflation, it has remained steady, and it increased along with the prices of commodities and services in the market. 

There’s less volatility with gold when you compare it to other investments like cryptocurrencies and although there are no big peaks that have happened unlike with Bitcoin, this is still an excellent opportunity that many investors should try to preserve their wealth.

The Great Depression and When Wall Street Crashed

During the time when the market crashed in 1929, the price of this yellow precious metal has risen from $300 to $650 per ounce. With this, a lot of people have converted their money into bars and coins because they noticed that they can trade more with tangible assets. 

However, the Gold Reserve Act was passed by Congress in 1934 to stop the practice and forced a lot of individuals to sell their holdings back to the Fed. Get more info about what happened at this link: https://www.encyclopedia.com/history/united-states-and-canada/us-history/gold-reserve-act-1934. When the US dollar became the official reserve currency, the nominal price per ounce of gold was $35. It rose to the top during the war in the Soviet-Afghan and by around January 1980, it was around $2150.

This has also happened during the pandemic when the market prices were between $1700 to $2000 when all the other company stocks were falling. This is a tail-risk hedge that should be at least 5% to 15% of your portfolio for insurance.


Want cheaper alternatives? Then silver has an estimated global reserve that amounts to more than 700,000 metric tons. Private companies hold around 3,000 of those, and it’s used by various industries related to medical fields, solar panels, and electronics.

However, this bright and white metal has a more volatile price. Massive price gaps may be noticed since the value of silver is around $17 per ounce. Jewelers account for almost 25% of the overall demand for the metal and unlike gold, the pure form of this precious metal is very soft. 

Thus, it needs to be created with copper to increase durability. This is also called sterling silver, where the content of the other metals can be up to 7.5%.

In the digital age, silver has proven to be very useful, especially with radio frequency equipment, nanotechnology, and batteries. Laptops and smartphones have it, as well as the mirrors and windows in your home. 

Adjusted to inflation, the highest value attained by silver was $111 and that was in 1980. Many investors are looking at the current supply and demand to see what the future holds.

Platinum and Palladium

Known as a by-product of mining copper and nickel, platinum is rarer than gold, and there are only a few deposits found on earth. It’s very good as a metal roof, and it can be used for other industrial purposes. It’s also popular in the creation of catalytic converters and various devices. Know that it holds some value when it comes to investments but can’t totally rival gold in this aspect.

It’s also volatile, and its price can rival that of gold. The rounds and bars can be deposited into a self-directed individual retirement account. However, they should be produced by an accredited or national mint, and the purity should be around 0.9995. It has similar properties to iridium, rhodium, and osmium and may naturally occur in the same deposits.

Others are getting their luck in other essential metals like palladium. It’s used in groundwater treatment and in other chemical applications. They are very valuable, but investors may not put too much emphasis on it compared to the first two. Visit posts about a palladium on this webpage.

Are there any Risks?

As with any other investment, there are disadvantages when you invest in these tangible assets. One of the more common ones is the volatility of the price. Various factors can affect their value, like supply & demand, economic changes, political climate in a country, inflation, and fears of recession. Investments like mutual funds and ETFs may also carry a different risk where mining companies’ stocks may plummet because of mismanagement.