The last eighteen months haven't been good for any economy. Not only are stock markets finally falling from their record highs, but the global economy itself seems to be edging closer to another major recession. All signs point to yet another financial crisis, and it seems like the odds are in favor of the next crisis being worse than those that have come before.
It makes sense, then, that so many people are beginning to worry about what will happen with their money. After all, these investors have been riding high on the waves of unprecedented stock prices, but actually safeguarding that wealth will require finding another place to keep their money.
If you remember what happened with the markets, you can easily see how the problems that might occur in the future could impact your wealth. After all, many investors saw the value of their portfolios drop by more than fifty percent, so it's wise to take a lesson from them and ensure that such an issue doesn't happen to you.
So, where do you turn? If you look back at 2008, you can find one part of the market that performed very well - precious metals. In the wake of the 2008 crisis, precious metals soared to greater heights than ever before. Today's investors aren't concerned with whether they should invest in metals again, but rather in which metals they should invest.
Not only will doing so require understanding how the market has changed, but it will require looking at a host of metals that might not have been available back in 2008.
What are precious metals?
Gold is almost always the first metal that people think of when they are asked about precious metals. This metal has been hugely important across the globe for thousands of years and it has been put to work as everything from a currency to an important part of the industrial process.
Gold is the standard when it comes to judging the value of a precious metal. Gold has historically been used to back currencies and it has almost always held a value that is unique in and of itself.
All you have to do to understand the value of gold is to look at how gold grows in value over time compared to a traditional currency, which will almost always drop in value.
Gold tends to be seen as a way to keep a portfolio stable or to provide a little bit of diversity to one's retirement holdings, but it can be much more than that. In fact, the value of gold tends to go up and that can actually help you grow your overall wealth.
Growth has been slowly and steadily gaining in price since the 1970s, with the price of gold soaring far above that of the average stock ever since the beginning of the 21st century.
Whenever stock markets trend downward, and the economy looks like it will fall apart, gold becomes the investment of choice. Many investors are now looking at gold as a way to keep the money they already have safe.
Some of these investors look at gold as the perfect retirement tool, with the availability of the gold IRA giving them the ability to get the same kind of tax protections they'd get from a traditional IRA.
If you currently have a more traditional retirement account like an IRA, TSP, 401(k), or 403(b), you may want to consider rolling over the money in those accounts into a precious metals IRA.
These accounts get the same protections as a typical IRA, but you can fund them with precious metals instead of stocks and bonds.
If there's a single metal out there that comes anywhere close to gold in the public imagination, it absolutely has to be silver.
Silver may be positioned as a second-place metal, but in reality, it's an essential part of any precious metals investor's stockpile. Silver is a metal that has risen so rapidly in price that its actual growth has outpaced that of gold.
Silver is different than gold in more ways than just its color. Silver is used very heavily in the industrial world; in fact, more than half of the use has nothing to do with aesthetics at all. Silver gets used in such industries as solar panels and dentistry, putting it in very high demand.
These industrial uses of silver mean that it's very likely to continue in high demand in years to come. At the same time, though, the actual stockpile of silver has dropped quite a bit. This means that the law of supply and demand may cause the value of silver to skyrocket in the near future.
Silver can also be added to an IRA, just like gold. Silver IRAs can allow an investor to hold on to certain types of silver in a safe account that not only gets excellent tax advantages but that can allow them to enjoy the rising price of silver safely.
Platinum may not be as standard as gold and silver, but it's one of the best metals you can invest in today.
Though platinum has been around for quite some time, it doesn't have gold's long history. Instead, the metal itself really came into the public consciousness in the 18th century when scientists finally figured out how to separate platinum from other types of precious metals.
Once platinum could be separated, though, it was an incredibly durable metal used in many different types of industries.
Platinum, like silver, really is an industrial metal. About half of it that is in use right now is used in catalytic converters, though it is also increasingly used in the jewelry industry. You can also find platinum in electronics and even in the aviation industry, making it a metal that's in high demand.
There's actually relatively little platinum out there in the investment world, and the price of platinum is significantly more volatile than you'd expect. Slowing economies can actually drive down the cost of platinum because it's no longer being used in industry - and that, in turn, can hurt your investment.
Another significant issue is that platinum is no longer the metal of choice for catalytic converters. Now largely replaced by palladium, the price of platinum has dropped. As more and more automakers abandon platinum because of its perceived high price, platinum is falling as palladium rises in price.
Another issue with platinum is the fact that it comes from a relatively volatile region of the world. This tends to spook investors, of course, but that same volatility can lead to significant spikes in the price of platinum.
Given that platinum is not likely to drop significantly in price any time soon, it's very easy to see how platinum could end up being an extreme part of your portfolio.
Palladium hasn't always been that important, a relatively new metal that was only discovered about two hundred years ago. Related to platinum, it is now a significant metal used in the auto world, and it continues to rise in price due to the high demand for the metal.
Much like platinum, palladium is a rarely produced metal. The top producers in the world are South Africa and Russia, with the bulk of what's left over-concentrated in the United States and Canada. This means that it's very easy to disrupt the metal supply, and thus prices can continue to go up.
In fact, palladium reached thirteen hundred dollars an ounce when the supply chain in Russia was disrupted in the early 2000s. The price settled back down around 2008, but the price continued to fluctuate due to the metal's high demand in the automotive industry.
Today, palladium regularly trades at around two thousand dollars an ounce because of supply line issues. Though the price does fluctuate, it is typically a metal that is actually more valuable than gold.
The best news for would-be investors is that automakers continue to prefer palladium over platinum. These automakers are betting on the price of palladium going lower than platinum, but their use of the metal is actually inflating the price so high.
Given everything surrounding this metal, it does seem like the price is likely to stay stable or rise in the future.
Honorable mention: Rhodium
Though the metals above are by far the most common metals in the world of investing, it's always worth pointing out how useful rhodium can be for your portfolio. As the only other metal that actually has a real market, it's can be a good choice for many.
Like platinum, rhodium is both primarily mined in South Africa and largely used in the automotive industry. Issues on the supply side have led to rhodium being a metal prone to surges in price, with the all-time high almost reaching fourteen thousand dollars an ounce this year.
Though it currently sits at around eight thousand dollars an ounce, it's still significantly more valuable than five years ago.
So, why don't we recommend rhodium in our top four? Simply put, it is just too volatile for those looking for a safe way to store their money. Gold and silver may rise over time, but they tend to move slowly and steadily.
Rhodium, on the other hand, swings wildly. This makes it great if you are speculating, but it isn't good to invest for your retirement. Simply put, it's just not a metal that can help you back up the value of your portfolio.
Which metals are right for you?
Only you know the precious metal that is best for your portfolio. You have to stop and think about your retirement goals and how each metal fits into them.
The vast majority of investors are going to end up going with gold, and that's fine. Gold has continued to be so popular because it is so stable, and it works so well for those looking to safeguard their futures.
If you're looking for something that has more potential to grow quickly but has a more significant amount of attached risk, you might want to look at silver. Silver seems like it isn't valued correctly at the moment, so those who jump in now could be looking at a bigger payday in the future.
Likewise, going for something as valuable as platinum or palladium ups your potential risk factor considerably, but doing so can bring in much larger monetary rewards.
What's the best way to buy?
There are plenty of ways to buy into the world of precious metals. You can purchase physical metal called bullion from a dealer, of course, and hold onto that metal wherever you want. If you're going to do that, you almost certainly want to grab gold and silver as quickly as you can.
If you want to leave your bullion with a third party, you might want to consider setting up an IRA. This will allow you to store your metals in an IRS-approved storage facility and give you some significant tax breaks at the same time.
If you don't want physical metal, you might want to consider buying stock in a mining company, looking into an ETF, or even look at futures. You might also consider investing in companies connected to the world of precious metals, like companies that manufacture specialized tools for mining. These investments all let you participate in the market without holding onto physical metals.
Planning for retirement
If you are looking at retiring soon, you may want to consider investing in a precious metals IRA. This type of account is often called a gold IRA and can be incredibly useful for your future.
These IRAs are great for those looking for ways to store their wealth in a non-volatile manner and who want to make sure that their portfolios are well-diversified as they get nearer to retirement. Some people use these IRAs as simply a part of a larger investment strategy, while others make them the cornerstones of their plans.
This instrument is a unique type of savings account that has been around since about 1974. The account allows individuals to put pre or post-tax money into an account and watch their savings grow as interest and appreciation takes place without worrying about taxation.
Taxation won't happen until you retire and start to take money out of the count, at which time the tax consequences of moving the money might be much less significant.
The Roth IRA exists to allow an individual to put after-tax funds into an IRA account. You won't have to stress about paying taxes when you start taking money out of the account because you have already paid them.
Roth IRAs do have contribution limits, starting at about six thousand dollars but going up to seven thousand dollars after you turn fifty. If you are investing together as a spouse, though, your limits will range from twelve thousand to fourteen thousand dollars per year.
Precious Metal IRAs
The precious metal IRA is often called a gold IRA, but you can put any precious metal you like into the account. Setting up one of these accounts requires working with a licensed IRA custodian, finding a company from which you can buy specific types of precious metals, and storing your metals in an IRS-approved facility.
Though it may seem complex, many metals dealers make setting up one of these accounts a breeze. They tend to have relationships with custodians and storage facilities, letting you set everything up at once. These companies can also help you roll the funds from your traditional retirement accounts into your new account, allowing you to diversify your retirement portfolio quickly.
Which dealer is best?
There are thousands of precious metal dealers in the USA, and not all of them should be considered.
It's a significant financial decision to invest thousands, tens of thousands, or more with a company. And it's a decision that shouldn't be taken lightly.
You want to know the company you're dealing with is reputable, customer service oriented, cost effective, professional, and who is highly reviewed by real customers.
We have researched and reviewed a majority of dealers and have narrowed down thousands to a top 5.