Buy Bullion

WHY PRECIOUS METAL INVESTORS BUY BULLION

Precious metal has become one of the hottest investments in the market today. Investors have discovered several financial advantages when they buy bullion. It is sold in various forms in virtually every market around the world. If you want to be successful with your investments in bullion, then you need to have some basic understanding about precious metals and their significance in today’s world.

What is Bullion?

Bullion is a tradable type of precious metal. This kind of metal is practical because it can be used in various ways. This usage may be as a currency or in industry. Many people are not aware that these metals are used in a wide range of industrial applications. In order to qualify as bullion, the underlying quality must have a purity rating of about 99 percent. This means that only one percent is made of another base metal or other ingredient.

There are exceptions to this restriction. For example, certain American gold coins actually have a purity of just 91 or 92 percent. However, these coins are backed by the U.S. government and are known for their integrity, so many bullion purchases include these types of coins.

Why Do Precious Metal Investors Buy Bullion?

Turmoil in the financial market often sends investors scrambling for bonds or cash. They wait with these assets until the market calms down and then get back into stocks. However, in the last few years, none of these options have been deemed safe by numerous investors. There are various reasons for this apprehension, but they have all driven an eclectic group into the bullion market.

Precious metal investors buy bullion primarily because it acts as a hedge against inflation. However, many other assets can also hedge against inflation. Art and collectibles are good examples of such investments. Silver, gold and other metals of this group are unique among these “inflation defenses” in that they are mass produced and basically fungible.

These metals have greatly increased in value over the last few years. This is another aspect that draws an increasing number of buyers into the metals market. It is not just because some of these assets have high price tags per ounce, they have made exponential gains over the course of the last 10 years. Gold is worth more than five times what it was. Platinum has tripled in value. Silver has outdone them all and gained more than seven times its 2001 value. Price performance like this naturally brings investors running.

If you want to buy bullion and add this asset to diversify your portfolio, you can do so in various ways. There are different types that are issued in a wide variety of forms. Each member of this family and each product made have their own particular advantages and attractions.

Silver

This investment is frequently overlooked by people who are drawn by the headlines about gold. Interestingly, silver has been outperforming gold. It gets overlooked because silver is worth so much less per ounce than its more lustrous cousin. As of the end of 2012, silver was worth $30 per ounce. That seems paltry compared to the more than $1,660 per-ounce cost of gold. However, silver was worth just $4 per ounce eleven years ago. If you had invested just $10,000 in silver back then, you would have more than $70,000 worth of silver now. It is hard to find that kind of performance duplicated elsewhere.

Gold

Gold has always been the poster child for this market. This asset has performed spectacularly for the last decade. In terms of price per ounce, this bullion asset is worth the most. As 2012 came to an end, gold was worth over $1,660 per ounce. It began the century at values of less than $300 per ounce. In 2011, gold had reached per-ounce prices of more than $1,900.

Just as attractive as the past performance are the future possibilities for gold. Given the tragic state of the markets as the year 2012 came to a close, some gold promoters are predicting price ranges for this metallic asset ranging from $2,000 per ounce to more than $2,500 in the year 2013. Gold is an investment that should continue giving back well into the future.

The Platinum Group

Silver and gold have been known throughout most of our human history. A few centuries ago, Europeans discovered a metal in South America that bore a similar appearance to silver and called it “little silver” – or Platinum. This rare metal joined the family of precious metals and quickly achieved higher values than gold. Many people are surprised by this revelation. At the present time, however, platinum is worth a bit less than gold. Each ounce of platinum was valued at more than $1,530 by the end of 2012.

A number of other metals joined the platinum group in subsequent centuries. Among them are iridium and palladium, to name a few. Each has its own value and application in industry. However, while it is possible to buy quantities of these other metals in bars, they are not regularly minted in coin form as silver, gold and platinum typically are.

Precious Metal in Bars and Coins

The three main members of this family are silver, gold and platinum. Governments and businesses around the world issue versions of these metals as bars and coins. Precious metal investors buying bullion are advised to work only with respected entities. Governments will back the authenticity and value of the coins that they strike in their national mints. Large companies, such as Johnson Matthey and Credit Suisse, produce bars of various sizes that are respected around the world for their value. Each form of these precious metal assets has its own special use as an investment.

• Buy Bullion Precious Metal Coins

Many people prefer to buy bullion in coin form because these assets are highly liquid. It is easy to sell many of these coins on the market. However, when buying coins, it is wise to only work with governments. There are many private mints that strike coins – or rounds, of questionable quality. Some of these items are merely gold-plated. This explains why they can sell them for absurdly low prices.

Common examples of invested coins include the American Eagle which comes in silver, as well as gold and platinum metals. Other nations that mint coins of reputable quality include Canada, Mexico, China and Australia.

• Buy Bullion Precious Metal Bars

The one drawback to purchasing coins that discourages some investors is the high cost. Coins are sold for values well above spot prices because of the design and production costs involved. Bars are much more efficient purchases and you can buy them in various sizes. Companies such as Johnson Matthey even make one-ounce bars so that you can make very small purchases if your funds are limited, or if you want to buy assets that can be easily liquidated in small quantities.

As long as you know your options, deciding to buy bullion can be a very lucrative move. Most successful investors have now shifted large amounts of their funds into precious metals to prepare for an uncertain economic future.