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Looking to invest in gold and other precious metals but not sure how to get started? This APMEX article will help you learn.
Start by downloading the New Investors Guide. It’s full of detailed information about investing in precious metals and will give you a solid foundation on the basic principles of bullion investing. The APMEX Guide for New Investors gives you concise insights and quick-start facts on what you need to know to start investing in precious metals. Best of all, it’s free!
The Diversification Dilemma
Savvy investors try to diversify their portfolios. They spread their investments across different types of asset classes, such as stocks, bonds and cash. That way, if one asset class is down, the others may help compensate for losses.
The key is that the performance of each asset class is independent from the others.
Gold – The Fourth Asset Class
Historically, there’s been one asset whose performance is typically independent from stocks, bonds and cash. That asset is gold.
The value in precious metals like gold and silver is that their performance is not correlated with stocks and bonds. Their prices are not directly tied to government or corporate decisions.
And, unlike currencies that can be easily printed, the amount of gold and silver is finite. This scarcity contributes to their value.
For these reasons, many financial advisors recommend that investors diversify their portfolios by adding the fourth asset class — gold and other precious metals, such as silver, platinum and palladium.
Gold – Let’s Get Physical
Physical gold is available in many different forms, including bullion coins, bars and rounds. The most popular are bullion coins like the Gold American Eagle and Canadian Maple Leaf.
The value of these coins is internationally recognized, and their weight and purity are guaranteed by the governments that mint them. Holding physical gold allows investors to have complete control over their investments.
Key Terms You Should Know
Investing in gold and other precious metals is simple and straightforward.
However, there are some simple concepts you should know:
- Spot Price: Current, real-time price or market.
- Melt Value: The intrinsic worth of metal in a coin, bar or round.
- Ask: The price at which a dealer offers to sell.
- Bid: The price at which a dealer is willing to buy.
- Spread: The difference between what a dealer will charge to sell an item and what he will pay to purchase it.
- Troy Ounce: The traditional unit of weight used for precious metals.