Investing in precious metal coins is a good idea, no matter what the economic landscape might look like. In uncertain economic times, we know your mind might turn to purchasing coins more often as a means to ensure your security should things become dire. At Swiss America, our goal is to educate our clients about precious metals and why they can be a huge asset to your material wealth and security.
Here are five reasons why precious metal coins are a good investment.
1. You Can Have the Security of a Tangible Object
Notice that we keep saying “precious metals.” Gold might be the first metal to come to mind, but there are other metals, such as silver, platinum, and palladium, you can consider as options (and indeed, you should!). These metals are special because they don’t rust or corrode, don’t need maintenance, and don’t deteriorate. Gold is always in demand. Not only is it the first precious metal that springs to mind, but it also has many industrial applications in dentistry and electronics, not to mention in jewelry and coins. Adding gold coins—or any other metal—to your investment practices means that you’ll have a constantly useful stock.
On the other side of the investment coin, if you have a lot of money in stocks, it would be good to have some gold on hand since the correlation between the two is “virtually zero.” While you’re at it, it’s also a good idea to invest in gold as well, in order to keep a diversified investment profile. When you have a diversified portfolio, you’re spreading the risk you’re taking across many different commodities. This increases your odds of success in investing and will give you a higher rate of return. Since no one is sure what will be the best commodity in any given amount of time, it’s best to bet a little on many, instead of everything on just one or two.
2. Precious Metals Are Not a Credit Risk
Part of why it’s so great to have coins on hand is because they have intrinsic value. This means that your gold coin is worth at least the amount that it says it’s worth. Someone could take a gold coin as payment for a service or product. The price of metals is determined more by technical analysis, rather than the price of stocks, which are determined by a market price.
Of course, there is risk associated with anything you might purchase as an investment, and precious metals are no different. The main risk here would be technical imbalances in the market—if there are more sellers than buyers. However, this is why diversification is such an asset because, in times of economic uncertainty, sellers benefit when prices soar.
3. Demand and Scarcity Could Work in Your Favor
There is a finite amount of precious metals on the earth right now, and the influx of newly mined metals won’t last forever. As all the metals are dug up and the mines depleted, there will be a limited amount of these resources. As such, the demand for them will increase. This includes in the previously mentioned industrial applications, on top of the other buyers who might be collecting rare coins or who might want to gather their own little piece of insurance. Therefore, you can be assured that acquiring these assets will increase your chances of growing your wealth later.
Of course, there are different uses for all precious metals, so the prices will change depending on which metal you’re looking at. For instance, while gold is the most well-known and has many applications in electronics and the medical field, platinum more uses and is used in the production of silicones, plastics, synthetic rubber, and polyester fibers. Platinum can be used at extremely high temperatures, so it can be used in jet engines and missile parts as well.
4. Liquidity Isn’t a Problem
When you have an asset that’s immediately available as cash or funds, it’s known as “liquid.” A fancy car or a house wouldn’t be considered liquid because while they have value and you could eventually sell them, you would have to take some time to see them turned into cash. Some examples of liquid assets include the cash that you have in your checking or savings accounts, cash or currency you have in your wallet, accounts receivable (which is money owed to your business by your customers), and any precious metals you have on hand right now. If your precious metals are in coin form, you can easily convert them into currency whenever you might need to.
The risk of having liquid assets, especially the money in your wallet or the precious metals themselves, is that if you’re robbed or if the place you’re storing them suffers an accident, you could lose those funds and never recover them. There are steps you can take as insurance, such as storing your precious metal collection offsite so that it doesn’t walk away if your home is robbed.
5. It Has a Friendly Storage Size
Your gold collection doesn’t need a large storage area. If you decide to keep your gold collection at home in a safe, you won’t need a large walk-in safe like in heist movies. One thing you should be certain of, before installing the safe and buying the coins, is that your home insurance policy covers the theft of physical metals, not just objects. Make sure you keep good records of what you have as well.
While you want to be sure that your stash is safe and secure, it should be easily accessible as well. You don’t want to invest in assets you can’t actually get at when you need to.
At Swiss America, we love to answer your questions about gold and precious metal ownership. Contact us today to build your legacy.