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Options to Invest: Gold or Platinum

written by: Jason C. Chavis•edited by: Michele McDonough•updated: 9/20/2011

Understanding precious metals can be a major challenge for the investor. What to do to invest gold or platinum? Investment options for platinum and gold are expansive, including straight bullion or financial securities such as stocks and certificates.

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    Reasons to Invest in Gold or Platinum

    Gold bullion 2 

    Should you decide to invest gold or platinum? There are many reasons a savvy investor would put his or her money into gold or platinum. These are both essentially the most valued metals in the world. While many people know of the valuable additions silver can provide in your portfolio, many overlook other precious metals, particularly platinum.

    Gold and platinum both have intrinsic value. But to the investor, these can be viable options for your retirement account. Both of these metals tend to continue rising over time. For example, if one bought one troy ounce of gold in 1990 in a retirement plan for 20 years later, the cost would have been $391. By 2008, a troy ounce was selling for $865, more than twice the value of the initial investment, much higher than standard securities such as bonds, stocks or mutual funds can provide.

    Most notably, gold and platinum investments operate as a major hedge against the volatility on the marketplace. They offer strong returns even when the economy takes a downturn. In fact, depending on the reasons for a bear market, gold and platinum often bound upwards very quickly and dramatically, making investors large amounts of money. If one can time these market adjustments correctly, the individual or company can utilize the precious metals market even for short-term gains.

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    Physical Gold and Platinum

    One of the most common options for investing in gold or platinum is in the tangible precious metals market. This includes coins and bars. Many countries and businesses issue gold bullion to investors. Much of this stems from the fact that roughly 82 million troy ounces of gold are produced each year. On the other hand, platinum is very limited in regards to its bullion production. Due to its relatively high price, peaking at $2,300 per troy ounce in March 2008, as well as the fact that only five million troy ounces are produced each year, the metal is very limited in this format. One notable investment option for platinum, however, is the American Platinum Eagle coin, produced by the United States Mint since 1997.

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    Precious Metals Securities

    There are a variety of other options to invest in gold and platinum.

    One of the most common is gold exchange-traded funds, otherwise known as GETFs. These securities trade on the various stock markets and represent gold bullion rather than requiring individual investors actually purchase the heavy precious metals. Another similar option is to purchase certificates representing both gold and platinum.

    For those not interested in the finished product, a prime investing option in the market of gold and platinum is the investing of stocks in mining companies. There are numerous companies that specialize in mining these metals, each profiting from the value of sales.

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    Considerations Before Investing

    Is it really wise to invest gold and platinum? Before investing in gold or platinum, its highly important to make sure that you consider the ups and downs in the market. While both precious metals have historically risen over time and occasionally take dramatic jumps that can make a large profit, these are accompanied by massive losses as well. In addition, there have been incidents in the past with high-profile investors have caused artificial climbs and declines in the market. One must also be wary of purchasing gold or platinum in bullion form due to the fact that it is a prime target for theft.

    For more tips and advice, be sure to check out Bright Hub's Guide to Investing in Precious Metals.

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    Learn Gold Coins "Invest in Platinum":

    Gal Tech "How to Invest in Precious Metals":

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    Image Source

    Godl Bullion. (Supplied by Szaaman at Wikimedia Commons; Public Domain;

Precious Metal Investments For Your Portfolio

"Are silver and gold liquid investments?" The answer to that question is "yes!" When balancing your portfolio, its important to understand what the best silver investments are, especially if you are a beginner.
  1. Options to Invest: Gold or Platinum
  2. Beginner's Guide to Investing in Silver
  3. Identifying the Best Investment Options for Silver