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Investing in Precious Metals – What You Need to Know

Precious Metals Have Always Been a Store of Wealth

Precious metals have long been considered a safe and reliable place to store your wealth. They have been used as currencies since the beginning of time and are now more commonly viewed as investments in their own right. While the price of these assets can fluctuate, they tend to retain their value and have the potential to increase in value over time.

Investing in Precious Metals: What You Need to Know

When investing in precious metals, it’s important to understand the different options available to investors. You can buy gold bars and coins, silver bars and coins, platinum and palladium bars and coins, or you can invest in exchange-traded funds (ETFs) that are backed by physical bullion.

Traditionally, investors have only had the option to purchase gold and silver in the form of bars and coins. However, these options are no longer the only way to invest in these precious metals.

Other options include ETFs, closed-end funds and precious metals certificates. These are a great way to diversify your portfolio and take advantage of the benefits of owning these assets while also complying with environmental, social and governance (ESG) standards and values.

Leverage Risk

When you invest in precious metals, you may need to use leverage. This involves borrowing money to buy metals, allowing you to purchase more than you have in cash. This can be a risky proposition and should only be done with the guidance of a financial professional who is familiar with the nuances of precious metals investing.

Leverage also comes with extra costs, such as storage fees and insurance. These fees can quickly add up and make it difficult to recover your losses.

Volatility Risk

Precious metals prices can fluctuate rapidly, which can be a problem for many investors. Fortunately, you can mitigate these risks by investing in a well-managed precious metals portfolio.

Buying gold and silver in bar or coin form can help to protect your investment against inflation, while also making it easier for you to hold onto your wealth during periods of economic uncertainty. It is recommended that reviews you do not buy or sell gold or silver without first analyzing your portfolio and determining how much exposure you should have to these commodities.

The most important thing to remember when purchasing precious metals is to seek out reputable dealers who are knowledgeable about the industry and the nuances of the metals you’re looking to purchase. A good dealer will be able to provide you with valuable information about the different options available for buying these assets, and can help you avoid becoming a victim of a fraudulent scheme.

Taxes on Capital Gains

Investing in precious metals via coins, ETFs or closed-end funds can have a significant impact on your tax liability. In some cases, investors will be subject to federal income taxes on the profit from their sale of these assets.

Investors who have an existing gold or silver holding should consult with their accountant to ensure that they are compliant with tax laws. For example, if you own an ETF that is backed by gold or silver, it is important to make sure that you are not incurring any additional expenses related to your precious metals investment, such as the costs of shipping and storage.

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