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Investment Strategies – Why Invest in Gold, Silver, and Platinum?

May 25th, 2006

Investment Strategies – Why Invest in Gold, Silver, and Platinum?

Gold Coins
by US Mint

Gold and silver have been valued by numerous civilizations for over 5,000 years.  It offers investors a way to stabilize their investments.  If you invest solely in the stock market you are wagering all of your savings on a volatile market.  The stock market can sink if the economy goes into a depression.  The stock market relies on business being financially productive in order for the investment to pay off.  Gold, silver and platinum prices vary from the stock market prices which make it a good idea to diversify some of your investments.

What purposes and true value do these precious metals offer?  Why invest in a hunk of metal?  These metals are in demand for certain types of applications.  Besides the glitz of jewelry and decorative items, there are many practical applications for these precious metals.

 

Gold is used in the chemical industry to make a wide range compounds.  Gold is used to make electronics and is used as a coating on satellites.  Gold is also used in newly emerging nanotechnology applications as well.  It is also used in dentistry.

Uses for platinum are also numerous.  Platinum is used for jewelry, electrical contacts, dentistry.  Platinum is used on the missile nose cones and jet engine fuel nozzles.  Platinum acts as a catalyst to produce sulfuric products.

Silver is still a useful metal.  It is the best conductor of heat and electricity which it is used to make solder, and for circuit board electrical contacts.  Silver can be used to make high capacity batteries.  Silver iodide is used to help seed clouds to aid in making rain.  Photographic film developing uses silver nitrate.

 

How do you go about purchasing these precious metals?  There are plenty of retail and online stores that sell coins.  This can be a good way to buy if you are knowledgeable about the metals.  The US mint sells gold, silver and platinum coins both through their website as well as through dealers.  The good part of buying from the US mint is that their American Eagle Proof Coins are trusted as being a pure mix of metal.  The benefit to buying from the American Eagle Proof Coins is that each coin's content, weight and purity are guaranteed by the United States Government.  It would make it easier to sell if you needed too in the future.

You can also recycle gold from used electronics.  If you shop around you may find that jewelry is under priced for the amount of gold that it holds.  You really have to know how to work with the chemicals to strip precious metals out of electronics.

You might not want to physically own the gold and would rather own a gold certificate.  A gold certificate can be purchased through individual banks.  The banks are often in countries like Switzerland and Germany.  The bank issues a certificate showing ownership of the gold while the gold is held securely at the bank.  This method allows for an owner to sell a portion of the gold for cash if need be.  It makes it more secure than storing a ton of gold in your home and you don’t have to worry about securing the gold.

 

There is also another way to invest with a gold oriented fund.  This fund is directed at a collection of mining stocks which mine the specified metal or group of minerals.  Depending on the fund it could be very specific to the type of mineral or more general.  Each fund will vary how they invest in gold.  You actually don’t own gold, but a piece of the mining company that harvests the precious metal.

There is also exchange traded gold which is available to purchase through the stock exchange.  This allows for buying in on the futures market for gold.  This becomes a risky investment if investing for a short term gain.

Depending on the amount of money you have to invest will determine how you will invest in the gold and precious metals.

 
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Nicole Wilson
Best Syndication

Books on Investing in Gold

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Important:  The material on Best Syndication is for informational purposes only and is not meant to be advice. You should always seek professional advice before making financial decisions. 
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Copyright 2005 Best Syndication                   Last Updated Saturday, July 10, 2010 09:49 PM