How to Invest in Precious Metals

Series Summary

Personal finance is the application of financial principles to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, budget, save, and spend monetary resources over time while taking various financial risks and future life events into account. Components of personal finance might include checking and savings accounts, credit cards and consumer loans, investments in the stock market, retirement plans, social security benefits, insurance policies and income tax management. In this free video series on personal finance and investing, learn about precious metals and making money from a futures exchange trader. First, he talks about investing in precious metals and the differences of strategic metals. Then he talks about ways to make quick cash, legally.

Video Transcript

"Hello, my name is Mark Griffith, and this is a short introduction into how to invest in precious metals. Perhaps the first thing you need to do is be aware of what the precious metals are and how not to confuse them with some other metals which can also be expensive, usually known as the strategic metals or the strategic minerals. Precious metals tend to be metals that have been used in jewelry at one time or other, like platinum, gold, silver and some others you might not have heard of like palladium, rhodium, ruthenium. Strategic metals tend to be things like tungsten, cobalt, malibdinum, for example titanium and these are often used because they have very, very strong structural qualities. They can be used to make steel very hard, for cutting things in industry. They can be used to make very, very light pieces of aircraft for example. So you got to distinguish the precious metals and the strategic metals. Among the precious metals, you will find that although they are used for jewelry, they also have industrial uses. Silver is still used in photography. Gold is used in electronics. Platinum or palladium are used in catalyzers that make car exhaust clean and safe. So the precious metals are sometimes used for jewelry. They are sometimes used for industrial reasons, and they're sometimes used simply as bullion. In gobs which - of metal which are regarded as valuable in themselves to store value. And you'll find slabs of these in the vaults of most major banks. And as with just trading in gold, essentially you want to decide, do you want to hold the metal and if you want to hold the metal is this going to be a nuisance. If you have some bars of platinum round at your house, even if they're in a safe, you might attract the attention of burglars. If you don't want to be burgled, it might be good to keep it in a bank, but if you keep it in a bank you might have to pay them a little bit of rent to look after it for you. So you can either hold the metal, or you can hold the paper instrument which gives you the right to the metal or which tracks the price of the metal. Or as I said before you can try to invest in mining companies, whose value usually goes up and down in line with those metals. Be aware that there's a different problem with each precious metal. Silver is the most traded so large volumes of silver are traded each year, the movements can be very fast, and it can also mean that you don't always understand why the price is moving the way it's moving. There's a similar problem with gold which is heavily used as a bullion metal, as a reserve metal by major banks. Quite often, of trying to do several things in the markets, they might try to reverse a price move by gold, so gold is moving up, because everyone feels unhappy about the dollar. The central banks at this point may be dumping gold to raise money for their own purposes and also to manipulate the price of gold back down again. So if you deal in gold and silver, you have healthy volumes, you can easily get in and out of the market, but the prices can move in unexpected ways. If you deal in rarer metals like platinum, palladium, rhodium, ruthenium, you have the opposite problem. The volumes are very thin meaning there's not much trading on any particular day, which means that you can find it difficult to get out of the market or into the market at the price you want to. If the volumes are thin, you can find yourself in a position where you're the only seller, and there's nobody ready to buy off of you. So there are dangers with being in markets which have very, very large volumes, and there are dangers with being in markets with small volumes. Your advantage with things like platinum, palladium, rhodium, ruthenium is they're generally not used as bullion metals, so you're not actually setting yourself up against the major banks, they're not trying as hard to control those prices. So you have an advantage there. As ever, be careful and decide what it is you want to do, decide how much risk you want to take on and decide how much you can afford to lose and good luck."