Steve Ebert is the Editor and Partner of www.bullionpost.com. Bullion Post is an online network for buying and selling precious metals and collectible coins in both online auction and fixed price formats. Contribute your own ideas on precious metals at our Bullionpost Forum. List your precious metals and collectible coins as our site has low transaction fees.
Bullion Basics–The What, Why, How to and When of Bullion
What is “Bullion”?
What are Precious Metals?
What are Numismatic items?
Why invest in Precious Metals?
How can I invest in Precious Metals?
Questions to ask before investing in Precious Metals
What type of Precious Metal should I invest in? And how much should I invest in Precious metals?
When should I buy or sell Precious Metals?
What is “Bullion”?
Bullion is a precious metal in the form of bars and coins. A metal must be deemed rare in order to be considered a precious metal.
What are Precious Metals?
Precious metals are rare metallic elements of high economic value. The most commonly known precious metals are Gold, Silver, Platinum, and Palladium.
What are Numismatic items?
Numismatic items are items that are a part of the study of currency in its many forms of coins and paper money and their history. For the purposes for use at Bullion Post, any items that do not fall into the bullion category are placed in the numismatic category. Examples would be rare coins and rare paper money.
Why invest in Precious Metals?
They are an important part of an investment portfolio. They have potential for price appreciation. As currencies decline, they generally rise in value. They can be used to protect your wealth due to a volatile or declining currency. They can be viewed as “the ultimate insurance” in difficult times. You own it, no one else can lay claim to it. They are an asset that one can have in hand versus paper assets that can just decline to have no value. Further, an in-hand asset can be a stronger asset than banks that can fail, stocks and bonds that can have companies file bankruptcy, and treasury bonds that are dependent on hugely indebted federal and state governments. They will always carry some value. Precious metals markets have been manipulated lower in the futures markets giving the potential for significant price growth. They were part of the original United States Constitution. The Founding Fathers saw the importance of precious metals in being the currency rather than paper as the currency. This alone should show their true value. Always remember that each precious metal trades in its own market and has its own uses and demands. This means that each precious metal will not move the same as each other. This should be viewed as potential opportunity.
How can I invest in Precious Metals?
Dealers
Mints
Currency
Online auctions
Questions to ask before investing in Precious Metals
These are excellent questions and to find the most appropriate answer for each individual investor, you need to consider the following:
What is your prior investment experience? What is the total of your investment capital? How much do you have to invest? What are your investment goals and time frame? When would you need this back as cash or to invest or use for something else? How much can I commit to this area and sleep well at night? This area has much volatility, which can be beneficial when it rises in value, but can give pause when it pulls back. Am I a conservative investor or an aggressive investor? What is your confidence level in your financial advisor, the stock and bond market, the general economy, and the government?
What type of Precious Metal should I invest in? And how much should I invest in Precious metals?
If you are new to investing in precious metals and do not have a trusted advisor, let’s start with some generalities:
Read as much information as you can from as many sources as you can. You need to know why you are investing in this area before committing your investment capital. Your research should lead you to the metal that you feel comfortable investing in. Each of the precious metals has their own uses and demands. Silver, platinum, and palladium have industrial uses as well. Your percentage of your total investment capital committed to this area will be based on how aggressive an investor you are. Some may see this area as being a conservative investment area while others may see it as an aggressive area. Some investors prefer just one precious metal while others like to have a combination of bullion products. For some, price may be a factor in determining which precious metal to buy. Maybe you cannot afford a 1 ounce gold bar at $850, but you can afford a 10 ounce silver bar for $150. Storage. As a valuable asset, your precious metal will need to have a place for safekeeping. A safe is a valuable tool here as this protects from the risk of theft and fire.
When should I buy or sell Precious Metals?
If you are looking to invest what you determine to be a substantial dollar amount, you will want to do some research on the current trend of the market to determine if you are buying at an opportune time or not. Charts and trend lines can be useful tools in this. If you are looking to invest in smaller amounts and in a more systematic manner, you should still do your research, but not be too concerned about “market timing”. With this type of investing you are trying to “dollar cost average” your investments. You will undoubtedly buy some at a higher price and some at lower prices, giving you an overall average cost per ounce.
Many investors try to buy on days that the metals are down substantially and sell when they are rising. This is called buying weakness and selling strength. Others will wait until the market turns up on the first day of higher highs and higher lows to buy and lower lows and lower highs to sell. Having a consistent strategy and plan can help in getting better prices for buying and selling.
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