In Episode 12 of Y’all Street, host Tarek Saab speaks with Amaryllis Gryllaki, Commodity Sales Director at Wells Fargo, about precious metals and commodity markets.
If you’re new to investing, especially in alternative assets like precious metals, understanding terms like ‘contango’ and ‘backwardation’ is crucial. These concepts affect how you might finance your purchases or manage your investments. In this episode, Amaryllis Gryllaki breaks down these terms and their implications for newcomers.
What is Contango and Backwardation?
Contango occurs when the future price of a commodity is higher than the current price, while backwardation is the opposite-when the current price exceeds the future price. Understanding these terms can help you make informed decisions about when to buy or sell your precious metals.
How to Start Investing in Precious Metals
- Research different types of precious metals: gold, silver, platinum, and palladium.
- Determine your investment strategy: Are you looking for long-term growth, or do you want to buy physical metals for immediate use?
- Consider opening a self-directed IRA to include precious metals in your retirement portfolio.
- Start small: Purchase your first physical metal, whether it’s coins or bars, from a reputable dealer.
- Stay informed about market conditions, including the concepts of contango and backwardation, which can affect pricing.
When a bank evaluates, using the same credit spread across multiple products, being able to finance metal often tends to be far cheaper than it does with financing in dollars.
Amaryllis Gryllaki
Questions to Ask When Investing
- What are the current market trends for the metal I’m interested in?
- How does contango or backwardation affect the price I might pay?
- What financing options are available for purchasing precious metals?
- How can I store my physical metals safely?
By asking these questions and following the steps outlined, you can start your journey in investing in precious metals confidently.
