How to invest in metals: guide to know all the alternatives

The world of investment never stops, despite volatility or episodes that can harm our assets. And while many venture into the stock market or bonds, others look for classic refuges such as gold or other metals. How to invest in them?

You must know how to distinguish, first of all, between precious and industrial metals. The first of all tend to act as assets with which to protect themselves against episodes as dark as recessions. “Precious metals, such as gold, silver or platinum, always serve to cover themselves in periods of crisis economics, but it is also interesting to invest in them in other stages,” highlights José Luis Herrera, independent analyst goldco review.

“They can serve as an effective instrument to reduce your level of risk and volatility, since they have almost no correlation with other trading assets,” says the analyst. “In times of political instability, as in the case of the uncertainty of Brexit, or the extreme financial disorders in Venezuela and Zimbabwe, < a i=3>assets like gold or silver can protect our money”, he adds.

For their part, industrial metals, such as copper, iron ore or zinc, can have positive behavior in the markets depending on many other macro factors. and individuals. “From the monetary policies of the central banks, to the production of these resources in the countries, to the situation regarding exports and imports,” analyzes José Luis Cárpatos, investment director of Gloversia Eafi. They are not classified as a safe haven asset as such.

Once we have on the board what these two classes of metals consist of, many investors or future operators ask themselves the question of how they can invest in these assets: what alternatives there are and which ones may be the most recommended. Of course, we must always consider that this type of investment does not guarantee any return and is subject to constant changes due to market prices.

The physical purchase, in the case of precious metals
Indeed, not all metals are the same. In the case of precious metals, one of the possibilities is the physical purchase of bullion: “This is valid for gold, silver, platinum or palladium, for example,” describes Cárpatos.

How can it be done? It is necessary to turn to companies that are specialized in making transactions with bullion, coins or jewelry. “Above all, in the investor’s field you have to know that the company is legally registered, with all the guarantees, and that they have the lowest possible commissions ”says Herrera.

In the case of ingots, three fundamental factors must be taken into account: The purity of the ingot, which must be 99, 9% when possible; that have an international certificate on the metal; and to issue a purchase invoice for possible claims that we may make in the future, together with the purchase certificate.

Invest through investment funds
There are some categories of investment funds that are dedicated exclusively to investing in metals: both precious and industrial. It is a good option from an investment point of view.

Some of them are oriented towards gold assets, while other products focus on more commodities. “The normal thing is that these vehicles are focused on mining companies, producers and a long etcetera”, says Cárpatos. An example can be seen in investment vehicles such as Schroder ISF Global Gold or the Franklin Gold & Precious Metals Fund. To do this, all you need is to have an investment account in your own bank or in an online broker.

For those who are less experienced and want to deposit their money in metals, the possibility of funds is an option to consider. Of course, it is advisable to read the product brochure carefully to see how it is positioned and the commissions that will be applied to us as clients.

Choose other alternatives such as futures or ETFs
Among the most advanced products through which you can invest in metals of all types are futures contracts, contracts for differences (CFDs) and investments through ETFs. Everyone invests directly in these raw materials.

To access this type of product you need to have an account with an online broker. “There are many possibilities in the market and you have to focus on the range of products and the commissions that apply,” says Herrera. The nuance that experts focus on is that they are recommended options for more experienced investors.

For example, futures contracts are complex financial products and their trading is very limited in Spain in the segment of precious metals. “Management costs are higher compared to other vehicles in Spain,” says Cárpatos.

For their part, CFDs carry a type of risk that only a professional trader or investor is capable of handling: “They have to do with the multiplication of values ​​and the leverage in which they operate, because the capital that we have used can end up disappearing. ”Herrera warns.

Finally, the alternative of ETFs is a good possibility. This vehicle is an investment fund that is listed on the markets and that generally replicates a series of assets or indices. “In the case of gold, for example, companies linked to the precious metal,” exemplifies Cárpatos. These types of products can also be purchased through the bank or an online broker.

Leave a Comment