The Importance of Precious Metal Portfolio Diversification

Don’t put all your eggs in a single basket!

Precious metals are a great hedge against inflation, but diversifying it is essential for long-term financial planning and investment risk reduction, as

PrimeValues.org (precious metal investments advisor) advises us.

Here are the main reasons why you should and how you should diversify your precious metals portfolio:

1. It splits the risk:

every investment is risky, even if only slightly – by investing in multiple assets, you split the risk, thus becoming more secure on the long term.

2. More opportunities for growth:

if one of the metals in your holdings “jumps up” in terms of price, then you’ll rejoice gathering profits on it – silver and palladium are for instance, metals with higher potential for growth than gold

3. Gold is the most convertible precious metal:

you can buy and sell gold almost everywhere – you must own gold, despite silver being cheaper (you will be able to sell gold easier than silver, which is almost not traded at all in some countries)

4. Silver as “poor man’s gold”:

to most people, gold is too expensive (around 1,670 $ according to early 2013 prices) – but silver is there for you as an alternative (costing around 30-31 $ per ounce on spot)

The key is not to hoard all kinds of metals, but to split intelligently. You will have to find the adequate proportions of metals in your portfolio. How much you invest in silver, gold, platinum, palladium, potentially even other metals.

If you have a small budget (let’s say under 10,000 $ or less), then you must own gold and silver as well.

Only when having a substantial amount of money available for precious metal investments should you “attack” other metals, such as platinum and palladium. Some even invest in rhodium (one of the rarest metals, but hard to buy/sell and toxic).

Picture Credit- Canadian Gold Leaf Coin- Amazon

 

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