Reasons to Consider Investing in Precious Metals or Other Collectibles

While not discussed often on this blog, investing in Precious metals like gold, silver, etc., or even other types of collectibles like art, stamps, etc. may be a good option for some.  (Evan’s Note: I don’t discuss the topic very often because I don’t really understand commodity investing.  What is physical gold going to do for me if we do have the zombie apocalypse? and owning GLD or similar ETF just seems  the same as buying an inverse etf like SPXU)

Reasons to Research Precious Metals as an Investment

1. Lower impact of inflation

Prices of precious metals mostly rise when inflation is on the high end, and even during times of low inflation, the prices of precious metals have been rising in the United States.

2. They are liquid and marketable

The price of the particular metal is posted everywhere and it isn’t difficult in most places to find a shop that will buy back the metal (with a “fee” of course).

3. Physical possession

You get to keep, hold or even sleep with your investment. Precious metals are physical items, which you can choose to keep anywhere you desire. This comes with the obvious downside that your investment can be easily stolen.

4. Number of options

You’re not limited to silver and gold. There are many other types of precious metals available. You can pick any one of them to invest in, or use precious metal funds to investment in more than one type if desired. Your investment is going to hold value. While this post is focused on precious metals, a lot of the reasoning can be transferred to other valuable collectibles including rare autographs, stamps, etc.

5. Your item is high in demand

Currently, there are no shortage of places to unload metals.  Even other collectibles seem to have a market which is exploding.   Juliensauctions reported record sales of 20 million in 2009 (Evan’s Note: This number means nothing without previous statistics).

6. Information can be found with a little research

Researching precious metal prices is not particularly difficult and websites like http://www.collectorscorner.com, tfaw etc. sell other collectible items.  You could even check out E-Bay to see to if there is a demand for your item.

Do you own any precious metals? Do you have a collection that is worth anything?

Guest post by Amanda

7 Responses to Reasons to Consider Investing in Precious Metals or Other Collectibles

  1. One thing to be aware of is that precious metals CAN lose a lot of value/purchasing power in certain economic conditions. It is NOT a consistently strong store of value. For example gold lost about 80% of its purchasing power between 1980 and 2001. That’s much more volatile than stocks or high grade bonds which have never had a drawdown that big.

    • Completely Agree W!

      I actually don’t really understand the whole “investing” in gold or silver. To me it just all seems like short term speculation for a pop in gold prices and get out. And holding precious metals make even less sense to me. You get killed for a vig buying AND for selling!

  2. If you “speculate” correctly, gold can diversify and exceed major asset classes, but long-term it’s a losing proposition. Gold does not pay a dividend, it doesn’t increase earnings, has very little real-world utility and is costly to secure/store/transact. If people are hung up on gold itself, just buy a gold stock ETF; it’s taxed at a lower cap gains rate rather than collectibles tax.

  3. I am considering investing in water. It sounds crazy but you cant live without it and there is less and less of it. Gold on the other hand the world can live without. How this has anything to do with your post I have no idea but metals I have always felt were not worth as much as everyone thinks.

  4. I added gold trading in my trading portfolio recently to diversify my investment. It is just like trading forex and stock for me. However it includes less risk than other investment options. According to me, the biggest benefit of gold trading is that you can physically use it as well according your requirements.

  5. I am always looking at liquidity. Gold and precious metals actually offer very little liquidity in physical form. You’re right about the zombie apocalypse. We’re all going to want weapons and food, not heavy gold. But consider just day to day living. If you need to sell your few gold coins to cash out do you really think that a friend, neighbor or even investor wants to buy it or has several thousand dollars ready to buy it off of you? And forget the infomercials or jewelry stores/pawn shops. Not only will you get hit with a fee but you will also only get a percentage of its worth because they have to resell it. You will likely lose money.

    Collectables on the other hand might be a different story. One commenter brought up Beanie Babies. When they were hot they were selling at many multiples of their retail prices. Now you have difficulty giving them away. These hot items tend to maintain their value only as long as they are relevant. As soon as the market starts to cool, cashing out must occur otherwise you are just sitting on a bunch of junk. Similarly, there has to be some scarcity of the item to outweigh supply.

    Collectables are more speculation than precious metals but their yield can be so much higher (as well as risk).

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