With the increasing uncertainty and excesses of the global financial and economic system, investors are much more likely to migrate to the safety of precious metal investments.
Albeit gold has been the universal symbol of wealth for thousands of years, it is not the only metal available for investors to invest in. Other popular investment metals are platinum, silver, and palladium.
NOTE: When automobile manufacturers went on an investment spree in 2000 and 2001, the sharp demand for palladium pushed the price to nearly US $1,100. Its value today is now less than half that amount.
The biggest reason for investors to review alternative investments is that precious metals are tangible commodities that retain their intrinsic value. For precious metal investors, this means that when the value of the U.S. dollar decreases, the portion of their portfolio with the tangible commodities will retain its value; despite the deflation.
As you know, low demand and high supply means a drop in value of anything, including the dollar. – Robert Kiyosaki
- Investing in Gold: When real rates of return in the equity, bond or real estate markets are negative, investors often rush to precious metals – gold in particular – as an asset that has consistently proven to maintain its value.
- Investing in Silver: Unlike gold, the value of silver is influenced by its perceived role as a “store of value,” as well as its very significant role as an industrial metal. From bearings to electrical connections and batteries, silver’s special properties made it a desired commodity.
- Investing in Platinum: Platinum, another popular industrial metal, tends to demand a higher price than gold; particularly during routine periods of market and political stability. This is predominantly because the metal is much rarer than gold and/or silver.
Concerns about inflation is a driving factor fueling the climb of commodity prices. Holding precious metals in your portfolio is an effective strategy for addressing risk during times of economic upheaval, war, and when inflation is threatening currency values.
Gold and silver are the only barometers of the health of our monetary system. Those who want to maintain the current system may try to manipulate the barometers so that the masses misinterpret the situation as long as possible. But prices will not remain low for long. – Stephan Bogner, Analyst with Rockstone Research and CEO of Elementum International
To many investors, investing in precious metals is a means to diversify and partially hedge against the poor performance of equities. This means that the inclusion of even a small investment in precious metals to your portfolio will reduce both volatility and risk.