The precious metal market is a great way to save money for a rainy day. While it is possible to make a good income from investing in gold and silver, most people do not have the initial capital needed to make a large profit from any single trade.
In the long run though, it is wise to invest in gold and silver on account of the fact that their rates will continue to rise from your year. The value of gold alone increases at a rate of about two percent per annum. Of course this is well below the three percent inflation rate which means you will end up losing money if you hold on to the gold for too long of a period.
However, it is important that everybody own and invest in gold and silver on a regular basis. The simplest way to do this is to go down to your local bouillon or coin collector shop and pick up some small bars or coins. Make sure that they are small. It is pointless to buy the largest coins and bars available because the simple fact that it is hard to sell them. Holding on and storing this bouillon could also prove to be a difficult challenge for most small time investors.
From there, you can look into purchasing gold through what is known as an Exchange Traded Fund. These funds are available on the stock exchanges all over the world. When you purchase into an ETF, your money is being pooled with other investors in order to make purchases in companies that mine, refine, melt, cast and sell in the precious metals. These ETFs are a great way to make money from a short-term investment in gold or silver.
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Then there is the possibility of purchasing gold and silver certificates. While easy to purchase and sell, there are a lot of risks associated with them. For starters, he never actually owns the precious metal.
While the certificate actually represents gold or silver that is sitting in a ball somewhere, you never physically take possession of the item. Further, since they are merely a piece of paper that is traded on the stock change, they are also just as adversely affected as any other form of investment when there is a financial crisis. There are a lot of investors have lost all of their money because they invested in paper precious metals just before the recent debt crisis.
Right now is actually an excellent time to invest in gold and silver, simply because the fact that the current rates are not at their highest. While the value of these precious metals is indeed high, they are nowhere near the 1980 records. It is stated, that we are currently in the second stage of a bull market when it comes to investing in gold and silver. When the next stage commences in the coming year, more and more people will rush in to invest in gold and silver; thus driving the prices to an all new high. You deftly want to own prior to this third and final stage.
Keep in mind that while the value of gold increases at a rate of about two percent per annum, it is not uncommon for the value of silver to move as much is three percent on a given day. What this means is that there is a lot more money to be made in short-term investments when you invest in silver rather than gold. Further, as we get closer to this third stage of the bull market, you can expect the fluctuation in silver prices to increase as much as 4 to 5 percent daily.
Because of this fact, it is very important that you time your purchases and sales appropriately. Always make sure that you make your purchase is when there are dips in the value and never purchase anything when the value peaks. For new investor this may be difficult to determine when a dip or peak is occurring, but within time you will begin to see the common signs of the market.
As the demand for gold and silver continues to increase so too does its value. Many people believe that there is the potential for silver shortages to occur within the next year or so, which will end up driving the value of the precious metal through the roof.