Diversify Your Investment in 2025 by Investing in Precious Metals

Introduction:

In today’s uncertain times, with chaos in the news we get mixed messages from all sorts of experts. Some economists say that the economy is robust, others say it is fragile. So, what do we do with our investment portfolio? Do we keep the money in a savings account, invest in shares and bonds, invest in real estate or something else?

I have always had a rule of thumb to simplify my financial decisions. One is, in happier economic times, when jobs are plenty then invest in the share market. In difficult times, it is a time-tested practice to keep your hard-earned money on safer ground. The common man will call it insurance, the stocks and bonds person will call it hedging (against uncertainty). That is why precious metals are so important. They have several uses, both in the industry as well as the consumer markets. We will look into why investing in precious metals will increase your returns on savings at a higher rate than keeping it in the bank or the riskier share market.

Why Invest in Precious Metals?

Precious metals are safer because they don’t lose their value quickly. The market is fairly steady and not prone to news and scandals. They act as protection in tough economic times. Countries like China and India have been increasing their holdings of gold over the last couple of years. It is also valuable long-term security and can be kept at home or in a bank safety deposit box. Investing in metals also does not require specialized knowledge of other investment options, like stones or paintings.

The Best Precious Metals to Consider

1        1.      Gold:

Gold is considered the ultimate safe investment. It has been used as an exchange medium for goods and services for thousands of years. It is currently being bought by Central banks aggressively. With low interest rates the prices of gold are expected to reach as high as $2900 in 2025 as against $2650 now.

      2. Silver:

Silver is a cheaper but has high industrial uses, especially in the electronic industry, like printed circuit boards and semi-conductors. It is a useful option for people looking for a cheaper option to gold. Its prices are expected to go over $40 according to J.P. Morgan as against $30 per ounce now. 

      3.Platinum

Platinum is used by a wide variety of industries. These include catalytic converters for cars, in the jewelry industry, in the medical industry, electronics and other industries as well. Its demand is expected to outpace the supply thus the prices are expected to increase as well. Present prices are around $950 per ounce and expected to grow between $1100 to $1200 according to ANZ Research. The demand for the metal is expected to increase as demand for green energy products also increase, which has platinum uses.

4         4.      Palladium

Palladium uses include catalytic converters, electronics, dentistry, medicine, chemicals, ground water treatment and jewelry. It is also used as a catalyst to speed up chemical reactions. Present price of Palladium is in the $980 range and expected to increase to over $1150 according to Longforecast.com. 

We can conclude that precious metals are a worthy option for us.

How to Invest in Precious Metals

There are several listed traders who are licensed precious metal traders like American Hartford Gold, APMEX, Goldco, JM Bullion and Orion Metal Exchange. You could look for a reliable precious metals dealer in your town or city to purchase. There are several ways to buy metals but make sure that it is trustworthy. And always keep the receipts handy in a file for future reference.

Ways to Invest in Precious Metals

1. Buy Physical Metals

You can buy coins and bars of the metals in the form of jewelry or bullion. Jewelry will have the extra cost of margins by the jewelers who add their manufacturing costs and markup to the jewelry. Bullion is in the form of bars and coins. These can be bought from dealers in physical form. The metals are easy to sell back in case you need money immediately.  One of your concerns will be to store them in a safe place.

2. Exchange Traded Funds (ETF’s)

Exchange Traded Funds that follow precious metals are like Mutual Funds for corporate shares. ETF’s may follow a particular metal, like SPDR Gold Shares or iShares Silver Trust. Presently they are outperforming the Mutual Funds that invest in company shares listed on the New York Stock Exchange. iShares Silver Fund, a $15b fund has gained 32% in value since January 2024. Similarly, Invesco DB Precious Metals Fund has gained 29.6% and Granite Shares Gold Trust is also north of 29%. Doing a little research and talking to a consultant about which fund to invest in may give you an idea about which fund may be the best suitable for you.

The advantage is that you don’t worry about the physical storage of the metal. The disadvantage is that you don’t have the possession of the metal, which may worry some of us.

3. Digital Gold

Digital Gold is another way to purchase gold without taking actual possession of the gold. The gold can be purchased with the help of platforms or Apps, like Vaulted, Augmont or Digigold. The positives are that digital gold is easy to access and can be converted to physical gold. The negatives are its tax implications. While gains on physical gold is only payable after it has been sold, such a law is not applicable on digital gold and is taxed.  

5           Mining Stocks or Mutual Funds

      Another way to invest in precious metals is to invest in the companies that extract and process the metals. One benefits from the rising values of the metal as well as the company operations. However, the negatives are that different companies may have different efficiencies and performance, regardless of the surging prices of the metal.

Tax Benefits on Precious Metals

·                IRA (Individual Retirement Account) Options

You can hold your precious accounts and let them grow in a tax deferred account. This means that your account grows while you don’t pay taxes and only pay taxes when you start taking withdrawals. This can help your retirement savings grow at a higher rate. The capital gains tax rate is also lower (28%) than other investments. In a financial downturn, precious metals are a safer choice than say shares.

·                           Tax on Sales of Precious Metals

If you hold the precious metals that you have for over 12 months, the tax you have to pay on its sale will be lower in case of profit.

·                         State Tax Benefits

Some states give benefits on the purchase of gold and silver from sales tax. For example, Texas, Kentucky, Florida, Washington. Do some research before investment.

            Some Last Minute Advise

• Start Small: Get a feel of the market. Don’t put all your eggs in one basket, so the wise man said. Even buying a few silver coins can be a good way to get started.
• Secure Storage: Home or a bank’s safety deposit box, make sure your metals are protected. Personally, I prefer a bank, but safety comes first.