One of the best ways to diversify your investment portfolio is to invest in precious metals. Precious metals tend to go up in value when stocks go down. There are lots of economic conditions that precious metals can protect you from.When there is a market crash, market collapse, economic crash, economic uncertainty, and all sorts of economic bad news, whether local or global, the price of precious metals tend to increase so you are protected from losses you suffer if you invest in stocks.
With that said, there are many different ways to get into precious metals. After all, there are many different types of precious metals. Besides gold and silver, there are also platinum, palladium, and other more exotic precious metals.
These more exotic or less known precious metals have higher price tags than gold and silver in many cases. One of these is platinum. In fact, platinum is in such high demand that platinum bullion coins and bullion pieces are available in the market.
Why consider platinum bullion? Here are just some of the reasons you should consider this precious metal as part of your total investment portfolio:
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As mentioned above, you shouldn't put all your eggs in one basket. You never know what kind of economic challenges are coming your way. If you invest only in stocks, you might get into a situation where you would be waiting for a long time before you can exit the market. Why? You've suffered a loss on paper. If you don't wait for the market to recover, you might end up losing money.
You have to remember that with stocks, you only lose money when you sell. So even if the stock market crashed and the price of your stocks is depressed, you only really lose money if you sell at the depressed price. Precious metals like platinum bullion help diversify your portfolio because precious metals usually go up when the stock market is flat on its back.
At the very least, your platinum bullion holdings can increase enough in value that it would offset some of your paper losses. Keep in mind that you have to have enough diversification in your portfolio for your diversified assets to fully cover your other assets.
For example, if you only diversify 5% of your portfolio into precious metals and the rest are in stocks, and there is a stock market crash, you're not going to get much relief from the platinum bullion in your investment portfolio. Why? You only have 5%. So you have to think clearly regarding a particular percentage that you would be happy in investing in platinum bullion or other precious metals.
This percentage must be big enough so that when your stock holdings crash to earth, the appreciation of your precious metal holdings would be enough to cover most, if not all, of your paper losses in stocks.
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Another great reason you should consider investing in platinum bullion is that there is an industrial demand for it. Platinum is used for many industrial processes and industrial products. Just like gold, platinum is often used to make industrial products. Also, platinum is fast-gaining in popularity as jewelry items.
If you put these two factors together, you have a healthy base demand. Whenever a precious metal or any other investment option has base demand, its buyers should have peace of mind. You should have a little bit more confidence in buying platinum bullion because the worst case scenario is that it will depreciate in price to the level of its industrial demand.
In other words, it's highly unlikely your platinum bullion investment will be worth exactly zero. There's always a minimum threshold that will hold up its value. This can't be said for all types of investments. Many are just one-trick ponies. Thankfully, this isn't the case with platinum.
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If you are wondering why platinum bullion costs more money than gold bullion or silver bullion, keep in mind that platinum is much rarer than gold or silver. There's just less platinum to go around in the world. Its higher price is really a function of basic economics.
When there is a high demand and low supply, the price goes up. This is precisely why platinum bullion sells at a premium over gold and silver. This is one of the most important things to think about as you consider platinum bullion as in investment option. Its price is much higher and it often goes through major price swings.
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Since there is a big industrial base and user base for platinum, there is also market speculation on platinum as an industrial product. This helps the price of this precious metal go up and down. You can make quite a bit of money on the volatility of platinum bullion. Why? It's hard to make money when the price of something is pretty much standard for a very long period of time.
If the price seems stuck on years on end, you're really not going to make much money. This turns off investors and professional fund managers who are looking to cash in on some volatility. Interestingly enough, flat movements tend to get 'stuck' because they attract investors who like such movements. If you want to make money with your investments, you need some level of volatility. Of course, you shouldn't just pick an investment option just for volatility alone.
However, this factor is important if you want your investment to gain traction. The great thing about platinum bullion and platinum pricing, in general, is that it goes up and down fairly sharply. You can time your investment that you go in when it dips, and you sell when it spikes. This is not impossible. It's being done all the time. Still, if you just want to have a reliable way of diversifying your stock portfolio or your precious metal portfolio, consider platinum bullion.
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