Article by Adam Friedman
Investing in precious metal bullion has a kind of exotic allure. Shiny gold coins and silver bars are the stuff of James Bond movies, so who would you not want a gleaming collection of minted coins in their safety deposit box?
The value of metal bullion has always been tied to supply and demand: the bigger the demand for the precious metal, the higher the price will rise. Precious metal is a relatively small market that has the potential to fluctuate a great deal, so over the years, the price of gold and silver has seen sharp peaks and troughs in value.
Because of the demand from industry, particularly from the emerging markets of the far east, the value of precious metals, and in particular silver, has seen steady rises in the last few years. As such, many experts believe that investing in metals like silver is an excellent investment opportunity, even for the novice investor.
However, due to the fluctuations in price of all metals, it is usually a good idea to spread your risk over several different metals. Instead of only buying gold bullion, diversify into silver, platinum and palladium to ensure you minimize your risk potential should the metals bullion market experience any unexpected downturns.
Investing in precious metal bullion is not always considered to be a good long term investment. If your money is tied up in gold and silver coins or bars, you will see no return until you sell them, plus you will also have the issue of safe storage to worry about. But many people enjoy the novelty of owning bullion in the form of coins, so it comes down to personal preference.
As well as storage issues, coins are sometimes considered a risky investment for different reasons. There are many sharp traders out there who are more than happy to sell sub-standard coins for an inflated price, so unless you are confident you can identify a quality product, it is usually better to avoid investing in
