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In a 2020-2027 analysis by Grand View Research, the precious metals market size will grow 9% annually. They report that its value in 2019 was a huge $182.1 billion! So with these stats in mind, it’s certainly worth looking into investing in precious metals in the coming years at least.
Yet, before you jump straight in and start buying gold on a whim, you should consider some precious metal investment strategies first. This way, you can potentially maximize your chances of getting higher returns.
In this short guide, we’ll run you through five precious metal investment strategies that you should be aware of. Let’s get to it!
1. Purchasing Physical Precious Metals
One of the surest ways you can invest in precious metals is to buy them in physical form. When you do so, you alleviate the risk of any institution going bust along with your investments.
The only risk with buying gold, silver, or other precious metals in physical form is theft from your residence if you choose to keep them in this way. That’s why many purchasers of physical precious metals invest in a safe to keep them in. Or they may keep them in a safe deposit box in a bank they trust.
One of the easiest ways to get precious metals in physical form is to buy them online. Here you can click to buy gold online with ease.
2. Buy Shares in Precious Metal Companies
Buying silver and gold directly is not the only way to get involved in trading precious metals. You can look into buying shares in companies that deal with precious metals on various levels.
For instance, you could invest in companies that mine gold and silver. When the price of precious metals goes up, then it’s common to see the share prices in such companies rise as well.
3. Exchange-Traded Funds
Many exchange-traded funds (ETFs) now invest exclusively in the precious metal market. ETFs are a great option for investors that want other experienced investors to make expert decisions on trades.
An ETF is a basket of shares in different companies that can be considered as low, medium, or high risk. If you’re someone with little time to spend researching investments, ETFs are something to consider.
4. Contracts for Difference
Contracts for Differences (CFDs) are financial derivatives. They are an agreement between a broker and a trader to exchange the differences between the prices of assets.
So in simple terms, you don’t need to own any assets with CFDs but gain many of the advantages of real investments. The main advantage of dealing in CFDs relating to precious metals and in general is that you can have short positions. This means you can take advantage of the falling in price of precious metals along with the rising of them.
5. Precious Metal Futures
Precious metal futures contracts are derivatives where people agree to buy and sell the commodities. The advantage of precious metal futures is that the market tends to be more liquid than the physical market for such commodities.
Also, the costs of dealing in futures are often less than in the physical gold, silver, and other precious metal markets. Futures don’t have any swap fees, for example.
Precious Metal Investment Explained
There are five common precious metal investment options to check out. These are buying physical commodities, shares, ETFs, CFDs, and futures.
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