Five Questions To Ask Yourself Before Purchasing Precious Metals

APMEX - Between the recent recession and world economic crises, you've probably heard someone joke about taking money out of the bank and putting it under a mattress. For the uninitiated, this seems safer than leaving money with government institutions.

Good investors, however, understand inflation. The dollar may not always hold its value. To mitigate risk, they put money in Precious Metals like Gold, Silver, Platinum and Palladium. These core metals offer intrinsic value and stability that no bank or reserve can reproduce with paper.

If you're planning your financial future, ask yourself the following questions. You may be on your way to amassing a new kind of wealth.

1. Are Precious Metals the right type of investment for me?

Precious Metals are just one more form of saving. However, it's important to have liquid assets that you can move easily in case of emergencies.

Further, Precious Metals are a long-term investment. Because the price of Precious Metals constantly fluctuates, you'll need patience and comfort with volatility to see real rewards.

2. What kind of Precious Metal do I start with?

As an individual investor, the best place to start is with bullion: refined Precious Metal bars, rounds or coins. They're easy to get and allow you to hold — and control — your growing wealth.

When choosing between bars, rounds or coins, think about where you can safely store them. Bars are efficient ways to buy Precious Metals but may take up more room. Smaller rounds and coins are easier to liquidate since they are more convenient and of a more tradable size.

While it's tempting to start with the more rare metals, invest in Gold or Silver first before buying Platinum or Palladium, since they are more common in the marketplace..

3. What should I look for in Precious Metals?

For investment purposes, bullion does not have to be in perfect condition. Its value is based in its metal content. The more pure it is, the greater its value.

Some coins have value above their metal content, known as numismatic value, which is based on the historical value, aesthetic features, mint year, rarity and collectibility of the coin. With so many qualities to consider, it's important to research before making a purchase or sale.

4. What's my ROI for buying Precious Metals?

"If you had invested $10,000 in Gold bullion in January 2001, your 37.81 ounces of the Precious Metal would have been worth more than $69,000 by September 1, 2011. That beat the pants off stock investments," personal finance columnist Kathy Kristoff said.

Like with any investment, your return on investment can vary greatly depending on a number of things, but generally, the longer you hold on to your Precious Metals, the more they'll increase in value.

5. When should I buy?

Ultimately the decision is up to you. Many find it helpful to bite the bullet and make a purchase while it's on their mind. Waiting for better prices may or may not happen. Do your research and purchase when is best for you. Some find it helpful to develop a monthly metals budget. By doing this, the highs and lows of spot price even out over time.