Precious Metals Market
The precious metals market includes silver, gold, platinum, and palladium, which can be purchased in various forms for inclusion in the investor's precious metals portfolio under the safest of circumstances. In a world where changing government policies and outside pressures cause unexpected changes in the economy, safe investments become increasingly important. Gold and silver bullion, coins, jewelry, medallions, etc. also appeal to a person's need for a "hands on" experience with the valuables he accumulates.
Stock markets and mutual funds can be great sources of revenue, but they are subject to the whims of the world markets, and can be subject to serious corrections and losses. Having a precious metals portfolio is less risky, so is a good balance to the less certain stocks and bonds. Precious metals are one of the only financial asset classes in an investment portfolio that are not simultaneously someone else's liability.
Coin collectors have a very large selection of items in the precious metals market from which to choose. Whether it is gold doubloons from an ancient Spanish treasure, or an Early American silver coin, the history and design are both interesting features to be enjoyed. Newer coins may not have the age factor, but can have historic and artistic significance anyway. Several designs of Liberty on American coins have been struck, and having all the different ones makes an interesting collection. Modern presidents such as Eisenhower and Kennedy have had coins with their profiles, bringing to mind the particular historical events surrounding these men. With those newer coins, an increased value depends upon their condition. Well-used coins are not worth much more than the face value, while new or like new coins are more valuable.
There have been quite a number of commemorative medallions created out of all of these metals, which can be added to a person's precious metals portfolio. Important anniversaries of cities or states are often the inspiration for crafting medallions that will become collectors' items, largely because of the limited number produced. Still another area for special coins or medallions is the world of the military. A conscientious collector will probably want to add military coins to his collection, especially if he has a connection with some branch of the service himself.
Of course, buying coins or medallions wisely requires that the buyer do some research on the matter. Consulting an expert in the field will be necessary, and then studying the history of the changes in value of the coins one has under consideration is another vital part of a person's investment strategy. Going into the market well informed will help the investor avoid making a serious mistake and suffering irreparable loss. Gathering coins into a collection is not always solely for financial gain. For some, the history surrounding a coin, and its design are the important features the collector is looking for. That kind of collector is seeking esthetic satisfaction more than monetary gain.
A precious metals portfolio might also include art objects or household items such as a fine tea or coffee service. This is another route for the esthetic collector, and often this kind of collecting is as much for future generations as the present one. Inheriting fine pieces of metal art is appreciated for multiple generations in some families, until someone finally decides it's more valuable to them in cash so they sell the items. The precious metals market is always open, as it were, and never reaches zero value, so a sale is always possible. In most instances, a profit will be realized. Investing is a wise way to prepare for one's future, and is important to everyone to some extent. However, Scripture reminds us not to misuse those gifts God placed in the earth for us. "The workman melteth a graven image, and the goldsmith spreadeth it over with gold, and casteth silver chains." (Isaiah 40:19)
When a precious metals portfolio is part of an individual's investment plan, and the metals include gold or silver bullion, the bullion can be saved in the vault of the company making the sale, or the purchaser can put it in his own safety deposit box or home safe. The objects of his investment can be taken out and viewed at the buyer's discretion. There is something inherently satisfying about being able to do that in the minds of many investors.
The American who has decided to invest in the precious metals market along with other investments will probably limit those investments to about 10% of his total investments. This will depend upon the investor's evaluation of the overall economic picture. European and Asian wealthy families traditionally have kept a strong percentage of their assets in gold as a protective factor, and gold coins are the objects usually found in their portfolios. Gold is most popular in America among the professionals and those who own their own businesses, as well as those with family wealth that has accumulated over generations.
For centuries there has been a precious metals market. Gold and silver particularly have been popular as personal adornments and as money since the earliest civilizations learned to mine them from the ground and make things out of them. The beauty and pliability of these substances have made them versatile from both a practical and artistic standpoint. The collector and the investor have a stake in acquiring these beautiful metals.
Precious Metals Mutual FundsDuring an economic downturn, precious metals mutual funds may see an increase in investors seeking liquidity and long term stability. Rare metallics, such as gold, silver, and platinum have a reputation for holding or increasing in value. Unlike stocks and bonds which can fluctuate wildly in a volatile market, metals perform better in times of economic uncertainty. Studies indicate that as the value of the U.S. dollar declines globally, the value of gold steadily increases. In 2008, gold reached an all time high of $1,000 a troy ounce and still lingers at nearly $850, in spite of global instability. Smart investors are buying into precious metals mutual funds as a safe hedge against market volatility and what many believe to be the beginnings of a deeper recession, or possible depression. "Trust in the Lord with all thine heart; and lean not unto thine own understanding. In all thy ways acknowledge Him and He shall direct thy paths" (Proverbs 3:5-6).
Mutual funds are investment companies which pool the resources of shareholders and invest monies in lucrative markets which promise high returns. Funds are managed by an experienced broker who makes decisions as to how to invest and diversify holdings for the greatest profit to its shareholders. Fund managers study market analyses and economic indicators to make the most prudent decisions. However, one doesn't have to be a market analyst to see that the smartest move would be to at least diversity portfolios with more stable rare metals in order to preserve holdings until the economy stabilizes. Precious metals mutual funds may invest in coins, bullion, or buy stocks in mining companies which produce gold, silver, or platinum. Mining producers, while impacted by an unstable economy, may remain stable and continue to see gains.
Precious metals mutual funds may seek to diversify portfolios by adding liquid assets, such as collectible coins in American Eagles and Buffalos, South African Kruggerands, or Canadian Maple Leafs. Amassing coins is one way to secure assets which have a solid monetary value and that can also be used as currency. Backed by the United States Treasury Department, American Eagles and other minted currency do not have to be reported and are not registered with the U.S. Mint. Collectors and investors can amass large quantities and store them in a safe deposit box or warehouse as a readily accessible source of cash. Rare metals also are available in bullion, which can also be warehoused. Precious metals used to be the investment of choice for the wealthy worldwide. The devaluation of the U.S. dollar may make collecting gold, platinum and silver coins and bullion a safe alternative for individuals who are concerned about future economic trends. While precious metals mutual funds buy rare metallics, most fund managers would recommend "not putting your eggs in one basket" and refraining from investing 100% assets in gold.
Before deciding to buy shares in a precious metals mutual fund, potential investors should study the company's prospectus. Reputable firms will have extensive and diverse holdings in the industry. Longevity is also a concern. Profitable firms have at least a ten- to fifteen-year history of gains in precious metals. Investors should also check out who is one board. Fund managers and analysts who are also experts in the field of mining or metallurgy may be best qualified to forecast trends and provide the most astute advice. Reputable mutual funds will advise that investments in rare metals are not guaranteed, nor are assets insured with the Federal Deposit Insurance Corporation. The potential for losses, especially in a volatile market with stocks and bonds plummeting on a daily basis, is highly probable. Precious metals mutual funds keep a careful watch on mining companies to determine whether new mines are being opened, the degree of productivity, and the stability of the governments where mines are located. Regions which are militarily unstable may not produce as much gold, silver or platinum; therefore prices may be higher due to scarcity. However, the demand for gold and other rare metallics may escalate due to market volatility; therefore fund managers may want to increase the percentage of holdings in investor portfolios.
Potential investors can browse websites of precious metals mutual funds and review how the funds have fared in the past several years. Investors can also study the profiles of key managers, analysts, and personnel; and log onto links which will lead to the websites of mining producers. In today's uncertain economy, investors should not be hasty, but take the time to do a thorough study of available funds and the companies they invest in. Socially responsible investments can be made in those companies which are proponents of human rights, especially in mining precious metals and stones. Domestic and foreign mining firms have been notorious for failing to provide adequate protection and compensation for miners. Socially-responsible investors will want to be sure to support those entities which not only have a reputation for producing high quantities of precious commodities, but also equitable treatment of workers.
In light of plant closures, bank failures, and corporate mergers; retirees, families, and individuals that are concerned about long term retirement income may want to seriously consider protecting assets by investing in precious metals mutual funds. Individuals who have worked hard for years have lost hundreds of thousands of dollars in 401ks due to plant closures. And seasoned investors have lost millions as a result of plummeting stock markets. Individuals may be able to recoup monies by investing in safe liquid assets, such as gold, silver, and platinum, a source of cash and a viable long term currency which could offer hope for tomorrow.