Physical metals are no one else's responsibility. If you have real metal, there's no paper contract that makes you feel complete, you don't need any intermediary to make you good. Gold and silver are the only financial assets that are not at the same time the responsibility of another entity. They don't require the backing of any bank or government.
In addition to some of the disadvantages of investing in precious metals, there are other risks that investors should consider. One of the most important is price volatility. A number of factors can drive precious metal prices, including changes in the economy, Federal Reserve policy, investor demand, mining supply, and inflation. We'll cover what they are; the advantages, disadvantages and risks of investing in them; and some precious metal investments to consider.
Drawbacks include the expense of storing and insuring physical gold and the potential underperformance of gold stocks and ETFs compared to the price of gold. While it's rare and very valuable for those purposes, investors don't place as much emphasis on palladium as they do on other precious metals. And some people still do, but instead of burying gold ingots in their backyard, they buy stocks or mutual funds that invest in gold. For example, some investors may be inclined to stay in the stock market but want to be exposed to gold and could therefore invest in stocks of precious metal mining companies.
Investors can also buy gold stocks (shares of mining, streaming or gold royalty companies), gold-focused exchange-traded funds (ETFs), or mutual funds focused on gold. Just like when you have a one-dollar bill in your hand, you are sure to be able to have your investment in the form of gold bars or silver coins in your hand (or keep it in your safe deposit box). In some cases, silver prices may surpass gold during periods of high industrial and investor demand. Advantages include the ability of physical gold to track the price of the precious metal and the potential for gold stocks and ETFs to perform better.
When it comes to investing in precious metals, you'll spend more time worrying about their value rising and falling on any given day, rather than accumulating equity in a rental home or property or watching your 401 (k) plan grow. While gold can help to increase balance and provide hedging for some investors, there are also risks to pay attention to. In times of uncertainty, people turn to gold with the false assumption that it will be a safe investment. I don't want it to sound like a broken record, but like gold and silver, platinum isn't the investment you're looking for.