Undeniably gold has been a widely recognized symbol of wealth for millenniums. But, after thousands of years, it is most certainly not the only precious metal available for investment-seekers to invest in. Other popular metals that are increasingly found in investment portfolios are silver, and platinum.
Investing in Gold
Gold, like all precious metal investments, can be used as a hedge against inflation, deflation, and/or currency devaluation. Given that gold is an asset that has consistently proven to maintain its value, when the rates of return in the equity, bond, and/or real estate markets begin to slide, investors often rush to the safety of this precious metal.
Chinese investors began actively pursuing gold investments as an alternative investment, after the Euro-zone crisis began in 2011. Since that time, China has become one of the world’s top gold consumers. Following close behind, India’s investors recently increased their purchasing of gold, which has led to a sharp rise in value of the precious metal.
Traditionally, investors have invested in gold by purchasing bullion bars. In some countries – like Canada, Austria, Liechtenstein and Switzerland – gold bars can easily be bought or sold at any of the countries’ major banks. Gold Exchange-traded products, also referred to as ETPs, offer another way for investors to gain exposure to gold investments; without the inconvenience and risk of storing physical gold bars.
Investing in Silver
For more than four thousand years, silver has been regarded as a form of money and “store of value.” However, with the end of the silver standard, the current demand for silver is primarily for industrial applications (estimated 40%), jewelry, bullion coins, and exchange-traded products.
Unlike gold, silver’s value as a precious metal is influenced by both its ability to function as a “store of value” for investors, and its many applications as an industrial metal. From bearings to electrical connections and batteries, silver’s special properties make it a highly desirable commodity across the globe.
Investing in Platinum
Industry analysts speculate that, based on annual mine production, platinum is approximately 15 to 20 times more scarce than gold.
Because Platinum has many industrial applications, and the fact that it is much rarer than gold and/or silver, it has emerged as another very popular investment. In many instances, this precious metal commands a higher price than gold; particularly in times of market and political stability.
Investors can invest in platinum as an ETF (exchange traded fund) traded on the London and New York Stock Exchange, platinum coins, and/or platinum accounts, which allow for platinum to be instantly purchased or sold like foreign currency.
The biggest appeal for today’s investment-seekers is that precious metals are a tangible commodity that have proven to the investment community that they can preserve their value in challenging markets. For precious metal investors, this means that when the value of the American dollar drops, the portion of their portfolio with the tangible commodities (like precious metals) will hold its value; despite the adverse effect that deflation will have on other asset classes.
Ongoing concerns about the harmful effects of inflation are also an influential factor in the climb of commodity prices. Including precious metals in your investment portfolio is an effective way to appropriately address risk during times of economic upheaval, war, and when inflation threatens currency values.
Gold and silver are the only barometers of the health of our monetary system. – Stephan Bogner, Analyst with Rockstone Research and CEO of Elementum International
For many private investors, making an investment in precious metals is an effective way of diversifying and partially hedging 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.