3 Easy Ways to Diversify a Precious Metals Portfolio

Diversification is an extremely important concept in modern investing. A portfolio that is well-diversified may potentially exhibit lower volatility while also potentially delivering higher returns. A diversified portfolio may make it easier to weather storms in financial markets and stay on track towards long-term investment goals.

While we believe that gold, silver and other precious metals are an invaluable tool when  it comes to portfolio diversification, we believe that good diversification goes beyond simply including physical gold or silver in your holdings.

In fact, we believe it is wise to go a step further and actually diversify your precious metals holdings.

Here’s three easy ways to do it:

  • Buy various precious metals: While gold may be considered the king of precious metals; silver, platinum and palladium may also play an important role within your portfolio. Outside of jewelry demand, gold is primarily purchased for investment purposes. Silver, platinum and palladium, on the other hand, all have some significant industrial uses. In fact, silver is used in more applications every year. Platinum is widely used in catalytic converters in cars. Palladium-based alloys are used in dentistry. The bottom line is, these metals may be affected by both investment demand but also by industrial demand. Don’t put all your eggs in one basket by purchasing only gold.
  • Buy precious metals in various forms: Gold, silver and other precious metals are available in bar, coin and round form. While the most important thing is their precious metals content, these products may have differing premiums attached to them and may see varying degrees of demand from investors and collectors. While bars and rounds will often carry the lowest premiums, coins also carry a face value and may be considered good, legal tender. A one ounce gold bar may be highly liquid while a rare gold coin may be difficult to obtain or sell. By holding these metals in various forms, you may be able to take advantage of any rising premiums or large increases in demand.
  • Buy big and small: One of the easiest ways to stretch your precious metals investment dollar is to buy larger quantities. For example, the dealer premium attached to a five-gram gold bar is likely much higher (on an ounce for ounce basis) than the premium attached to a one-ounce gold bar. The fact is, the actual cost of producing a larger bar is not much different than the cost of producing a smaller bar. That being said, it may potentially be beneficial to buy large weights when possible. You should, however, also buy in smaller weights as well. Why? The answer is simple. If you ever needed to liquidate some gold or silver quickly – to buy food or fuel for example – it may be much easier to facilitate trade with one-ounce silver rounds than with 100-ounce silver bars.

While we could dive much deeper into diversification strategies, these three simple, easy to follow steps will help ensure that your precious metals holdings are well-diversified. And of course, keep buying. Accumulating a significant precious metals portfolio takes time. Pay attention to the markets. If silver takes a nice dip, it may be a good opportunity to buy more. If gold is down five percent next month, it may be a good time to add more.

A precious metals IRA account is one of the best vehicles for building such a portfolio. You can acquire various gold, silver, platinum and palladium products in your IRA and they will be held safe and sound in an approved depository.

Don’t have a precious metals IRA? No problem. Have an old 401k sitting around? No problem. Our account executives can walk you through the precious metals IRA account setup process quickly and conveniently. Don’t wait for gold and silver to return to all-time highs. To explore your options, call us today at 1-800-341-8584.

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