There are many articles on precious metals on the web and some of them are quiet professional with a lot of details and data. The truth is, nobody can tell you which precious metal you should buy—not even us. Just as with any other class of assets, a portfolio of precious metals is best secured when diversified. For beginners, silver or gold may be the best place to start. Once you have at least some of each in your portfolio, many investors start integrating lesser-known metals like platinum, palladium, or copper. By diversifying with precious metals , you can make your asset portfolio less risky.
At such times you benefit enormously from the access BullionVault gives you to the liquidity of the full depth of the London market. You can enter an order to buy or sell at the benchmark prices published by the London Bullion Market Association (LBMA). These prices represent the deepest daily pool of bullion market liquidity in the world – typically restricted just to professionals, which is why you access it through us.
Gold bars are the most commonly purchased form of physical gold. When bought for investment purposes, these should typically be at least 99.5% pure gold bars. What you will typically see though from investment grade gold bars, and what you should be on the lookout for when purchasing, is that the name of the manufacturer, the weight of the bar, and the purity which is typically expressed as 99.99% is stamped on the face of the bar. These will indicate the quality of the bar, and vouch for the authenticity of it.
ETFs seem to be the best way to invest in gold. If you don’t like to own futures and monitor initial and maintenance margins, you can just buy shares of an ETF and follow the price of gold bullion. GLD is a liquid instrument and it doesn’t have high transaction costs. Futures are sometimes tough to handle, so ETFs may be the right move.
It has been shown in numerous academic studies including by the highly respected portfolio and asset allocation experts, Ibbotson and Associates, in a June 2005 study, ‘Portfolio Diversification with Gold, Silver and Platinum’, how silver, and indeed precious metals, are the only one of the seven asset classes with a negative average correlation to the other asset classes. It is also worth noting that the authors showed that, excluding cash, precious metals are the only asset class with a positive correlation coefficient with inflation, which is further evidence that precious metals act as a hedge not just against macroeconomic and systemic risk but also against the long term threat of inflation.