Safe haven trade:

Precious metals hedge your portfolio against inflationary pressures as they have no credit risk and have a negative correlation with other instruments. People also fall back on commodities like gold and silver during economic crises or political turmoil. Thus, when the economy of a country is not faring well or there is a warlike-situation, investors hoard precious metals rather than other assets.

Portfolio diversification:

Precious metals are an excellent avenue of diversifying your investments. But you should assess your financial goals and risk profile carefully before you begin. The volatility of these assets will help you to gain substantial profits if managed properly. However, on the downside you should avoid overinvesting in precious metals as when times are good they are not the best investment avenue. Also, though they retain their value over the long-term they offer little return as compared to other investments.

Range of investment options:

There are no dearth of options for those seeking to invest in precious metals. Some of the popular ones include Futures and options, commodity ETFs, bullion and coins, certificates, stocks and mutual funds etc. Futures and options provide liquidity and leverage for investing in the metals. Again, Exchange Traded Funds are an option to easily buy/sell gold, silver and platinum. Traders also have the option of buying/selling stocks and mutual funds that hold shares in mining firms.

Versatility:

Besides their demand in the jewellery industry and high intrinsic worth precious metals have various industrial uses and financial applications too. For instance, gold is used in electronics, dentistry and the medical sector. Furthermore, silver components are used for making solar panels, electronics, phones, computers etc. Again, the auto industry is heavily reliant on platinum and palladium.

Fungibility:

Precious metals are fungible; they are mutually exchangeable just like money. Hence precious metals are the oldest form of currency in the world existing since centuries.

Time-tested assets:

Precious metals have been used in transactions since ages whereas paper currencies have been in vogue only for a comparatively shorter time span. It clearly shows that these metals will never depreciate in value for a long time to come and are not likely to become obsolete.

Investing in precious metals can clearly be your path to prosperity but it is always vital to weigh the pros and cons first. Needless to say, the most upfront way for investment is the physical market but there are a number of other profit-making market opportunities too. People buy precious metals for various reasons. By keeping precious metals in your portfolio, you can ensure that liquidation is possible in times of crisis or adversity.