by Joshua Gillem

Created on: January 20, 2010

Precious metals are a good way to diversify your portfolio.  It is important to remember that old adage to not put all of your eggs in one basket.  Nothing, not even gold is immune to falling prices.  So it makes sense for the smart investor to own physical gold and silver, as well as some stocks, bonds, and cash.

Gold is a hot commodity.  It has had many uses over the past thousands of years, and until recently gold has always been a form of money.  The main use for gold however is jewelry.  People are obsessed with the yellow glittery metal for the way it shines.  Let’s face it, it is beautiful.  There are different grades of gold jewelry, known as karats.  In the United States, the most common are 10, 14, and 18 karat gold.  These numbers reflect the different purities of each. 

One thing that most people fail to realize though is that gold is also an industrial metal.  Gold conducts electricity extremely well and is used in a lot of different electronics applications such as computers.  Gold is also resistant to corrosion which in turn gives it a leg up over copper and silver.  Moreover gold is a clean metal that is able to resist bacteria, which is why it has a growing number of applications in the medical field as well. 

There are also gold investments to be had.  When buying gold, it is all important to take delivery.  It is not recommended that you buy futures or any other type of fund that you do not actually hold in your hand.  There is so much gold “promised” to investors that just is not there.  If you get a choice to actually own your investment, over the broker telling you that it is actually there, go for owning your investment.  Then at least you know it is yours. 

Where does an investor buy physical gold?  The best option by far is to open up your phonebook and look for a dealer.  A face to face transaction is much better than over the phone or internet.  There are also certain advantages to this method, but every dealer is different and these advantages will not be discussed here.  There are reputable websites out there that deal in precious metals as well.  One of the best is Apmex.com.  They, unlike other sites do not have a minimum purchase amount which makes it easier for the small time investor to get started.  You can also check out eBay, as there are a lot of people trying to make money quick by selling their gold. 

There is also a lot to be said about gold’s littler brother silver.  While silver is not the main focus of this discussion, it is much easier to get into than gold is as it is much cheaper.  Silver has a lot of uses and is undervalued at the present time.  Silver is however a bit more volatile than gold is, and is not for the weak hearted investor.  You can also buy silver at the above stated locations.

As stated earlier, gold is a hot commodity, especially right now with prices at all time highs.  Does the shiny yellow metal have room to grow though?  Some analysts predict that gold will continue the uptrend beyond the 2000 dollar per ounce mark.  Only time will tell, but if it does go that high, wouldn’t you hate to not be on that train?

For information about investing in gold jewelry click here.

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