subject: Precious Metals Investing [print this page] Do you love to wear precious metals like gold, platinum or palladium? Women for sure love wearing precious metals like gold and platinum. The best gift of love is to give a gold ring or necklace. Since, the dawn of human history, metals like gold, silver and platinum have been considered to be highly precious and used for trading and storing wealth.
Gold and silver have withstood the test of time and are still considered to be a store of value and as a medium of exchange. For a long time, the world had used the gold standard to back the global financial system. As an investor, you might ask what is in it for you by investing in precious metals like gold, silver, platinum or palladium.
Now, you must know this fact that the precious metals market is in a boom for the last ten years. The precious metals bull market started in 2000 and still continues. Why? You may ask! Inflation tends to eat away your wealth. So in inflationary times like the last decade, wealhty people, all over the world tend to hoard their wealth in precious metals like gold, silver, platinum and palladium. The global economy is in a recession right now! Governments all over the world are printing money fast to ease this recession. This increase in money supply will result in high inflation in the coming years as the countries come out of their individual recessions. FED in US has been using helicopter money to stop the economy from freezing. Giving away huge chunks of cash to banks and other failing insurance companies that might have collapsed otherwise in the winter of recession. Once the economy starts to grow, this much more greenbacks in the economy is going to cause inflation to rise. The rise in inflation is going to drive more people to buy precious metals like gold, silver, platinum and palladium and make the precious market boom continue for many more years!
In 2000, you could buy an ounce of gold for $288.50 but now the price is hovering around $1,200 per ounce, an all time historical high. A capital gain of almost 315%. Compare that with the performance of the Dow Index or the S&P 500 Index! Don't forget that platinum and palladium offers even greater opportunities.
Now, as I have said before, governments all over the world are bent on printing more and more money to prop up the collapsing banks and corporations. This increase in the money supply will be inflationary in the long run. More inflation means precious metals bull market is here to stay for many more years. Gold prices are not going to collapse for many years. Now, as an investor you need to know that the longer the time period of investment in precious metals, the more return you are expected to make. And in case, if you are a trader, you can still profit from the fluctuations in the precious metals market. The best combination is the gold and currencies market. Gold is negatively correlated to US Dollar, so trading both can hedge your risk while at the same time give you high returns.
Now, instead of investing long term, you can invest in precious metals as a means of giving you a steady income by investing in a divident paying mining stocks of a mature mining company. You can also generate income for yourself by writing covered calles on stocks of large mining companies if you own them. This way, you don't have to buy them. You can even invest in Certificates of Deposit (CDs) that are tied to gold and silver. These CDs invrease in value when gold prices increase giving you a capital gain.
You can buy precious metals in the shape of gold and platinum jewelry. These rings and necklaces over time will become more valuable. You can wear them and if you want you can sell them to realize a good capital gain. So this precious metals bull market will continue for more years. The last bull market in gold and silver had lasted for a decade. This bull market that started a decade ago may continue for another decade, you never know. Profit from this golden opportunity by investing in precious metals ETFs, precious metals mutla funds and even LEAPs on the stocks of mining companies. You can even speculate with gold, silver and platinum futures in the futures market!
by: Ahmad Hassam
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