Many people know establishing an offshore investment account is a smart financial move. They also know that diversifying that portfolio is a great way to protect the funds from the ups and downs that can affect any holding.
A popular choice for portfolio diversification is to include precious metals. Is it a good option for you? Before you answer, take the time to learn more about what it entails. Here are some key points to consider carefully.
1. Understand Your Motivation for Investing in Precious Metals
What are the reasons behind your idea of investing in these metals? Investors choose them for several reasons. In some cases, it’s because metals may not be affected in situations that leave stocks and some commodities in slumps.
Your reasoning may be that precious metals do tend to make good assets to hold for the long term. Maybe it’s just that you’ve observed the performance of a particular metal over several years, and you like what you see. Explore this idea further if the holding
and its projected performance are a good fit for your wealth-building plan.
2. Which Metals are Right for Your Purposes
If you decide to move ahead with adding precious metals to your portfolio, which ones are best? Without a doubt,
gold and silver are choices that you want to look at closely. These are the two that many investors choose to hold for the long term. They may offer a combination of volatility and return that fits
Two other metals to consider are platinum and palladium. These metals are also commonly used in manufacturing and the medical field. They are also used for jewelry, much like gold and silver. The relative rarity of palladium and platinum might make them perfect
for your portfolio.
3. Decide the Best Form of Investments
Investments in precious metals can take more than one form, such as coinage or bars. These physical forms are available, and you can store them in secure settings. If you have accounts with an offshore bank, it may provide storage.
Paper is another form. Examples include certificates and futures contracts. You don’t have actual ownership in this format, but you will generate returns if the market conditions are to your advantage. Remember that you can’t use the certificates to buy
physical precious metals.
A third consideration is digital metal currency. Think of it as representative money backed by physical units that appreciate. Digital gold currency is a prime example.
4. Where to Store Precious Metals
Physical investments, like coins or bars, must be securely stored. It’s a good idea to look at various locations and determine which will work best. As mentioned, an offshore bank may have storage facilities. That’s a great place to begin.
You also want to consider which nation is best in terms of storage. While security is essential, also understand any taxation. Determine the tax obligation in several countries other than your home location. You may find that the applicable taxes are much lower
and may even be non-existent for foreign investors.
5. Attendant Costs for Metals
Undoubtedly, there will be expenses related to storing those precious metals. Before settling on the location, make sure you know about them. It’s not just the monthly or annual cost for the storage unit itself or the taxes involved.
Along with rental fees, there may be management or maintenance fees, additional costs for increased security measures, or an inventory charge. If you sell some of your physical gold, expect to pay some fees for processing and preparing the transfer on your
6. Understand the Difference Between Allocated and Unallocated Metals
You’ll probably hear the terms “allocated” and “unallocated” when investigating various deals for precious metals. Knowing what those terms mean will help you decide which of these fits your investment goals best. In some cases, you may choose to include a
little of both.
You fully own allocated investments. Once purchased, they can be stored by a third party, such as a dedicated secure facility or even your bank. You are free to sell and authorize the transfer of allocated investments at any time.
Unallocated investments are not owned; rather, they are credited to you. For example, a bank may continue to own the actual metal, but you are now a creditor who has a claim on that metal. If sold, then you receive the proceeds from the sale.
Both arrangements can work well.
With allocated investments, you have full control and can move the physical asset if you like. With unallocated, you don’t incur storage expenses but enjoy benefits from appreciation and sales.
7. Decide Where to Base Your Offshore Investment Account
In addition to a physical storage location, you will need to decide where to base your offshore investment account. Start by looking at the nation where your offshore bank accounts are based. The bank you use may have investment accounts to manage all of your
However, there may be advantages to basing your investment account in a different nation. The exchange rate between currencies may be in your favor, or there may be tax or other incentives for basing the account there. Look beyond convenience to see if there
are real benefits to establishing an account in a particular nation.
Understanding the Nature of Precious Metals Investments
Remember that while precious metals have a history of performing well when other investments are experiencing slumps, metals are not immune to some fluctuation. Investigate the performance of metals in the forms you are considering and how that fits in with
your plans to build wealth in the coming years.
Precious metals can be less volatile than stocks or other investments. Do your research and speak with industry advisors. You may find they are the perfect investment to help grow your portfolio.
Luigi Wewege is President of award-winning Caye International Bank, headquartered in Belize, Central America. He is the author of The Digital Banking Revolution, now in its third edition, and has co-authored
economic research presented before the United States Congress. He also serves as an Instructor at the FinTech School in California and as an Advisory Board Member of
Fort Kobbe International Vaults in Panama. He holds an Italian MBA from the MIB Trieste School of Management with a major in International Business and a BSBA with a triple major in Finance, International Business,
and Management from the University of Missouri-St. Louis.