Investing in Precious Metals

Video Transcript

"Hello, my name is Mark Griffith. This is going to be a brief instruction on investing in precious metals. Precious metals are metals like gold, silver, platinum, ruthenium, rhodium, palladium. Those are some metals you might not have heard off. Most people will have heard of gold and silver. Traditionally precious metals retain their value. So you've got to decide are you investing in this hoping for gain, in cash terms or are you trying to get a bunch of money that you have and preserve it's value, because these are two different things. The price of gold might not move up for years, and years and years but you might feel to preserve its value. But you might feel you've preserved it's value and that other things are going up in price so you've actually held some cash somewhere. On the other hand, if you want to actually make money, you should think carefully before you invest in metals because they don't pay dividends. Dividends come from some shares. Interest rates come from some bonds, some other kinds of investments and you're not going to get an income stream from precious metals. Also they're extremely volatile. So you should consider carefully before you make them more than about 10% of your portfolio. There's nothing wrong with having a few precious metals in the portfolio but don't go over board because prices can move up and down very, very fast and that can mean you end up making big losses. If you've decided that you're going to have a mixed portfolio and precious metals are going to be a small part of it, then think carefully about what you want the form of the metal to be. Do you want physical ownership. Do you want virtual ownership or do want to invest in a proxy, like a mining company. If you want physical ownership, you need to think about where you're going to store the thing. Gold bars and silver bars are very attractive but them can make your home a magnet for burglars, so you might not want to keep them at home. You might want to keep them with a bank and you'll probably have to pay for that. Some people keep them in the form of coins and there are various coins like Krugerrands, which are solid gold and you need to learn about a field which is numismatics. Numismatics is rare coin collecting and bare in mind that there are plenty of coins that are worth more than the value of the metal that is in them. By definition, if they're worth much less than the metal that's in them, they tend to get melted down. An awful lot of rare coins have a value not because they're made of gold or because they're 10% silver or whatever it is, but because they're rare and they're valued by collectors far above the weight. This is a separate field like stamp collecting. In coin collecting numismatics is a separate and it's something you need to learn a lot about. You need to research. You can't simply charge into it, find yourself paying something that's way over the mark and then realize that in terms of the value of the metal in there, you've not really made a good deal. Consider bullion, consider numismatics and finally you want to consider maybe just buying certificates or simply having the gold and storing it somewhere else or having the silver and storing it somewhere else. Remember don't go over board. Price movements can be vicious and in any case it should be part of a mixed portfolio with other lower risk, lower yield items making up the bulk the amount. Good Luck."