Even more than just the recent downturn in the economy, investors are always seeking effective ways to hedge their investment portfolio against the decreasing dollar and inflation. Many turned to precious metals investing because historical data indicates that gold, palladium, silver and platinum continue to outperform other trading instruments during financial uncertainty.
Many of the central banks in Europe and the United States are turning to precious metals investing to solidify their own portfolios. They are doing this because they need to provide a more solid footing than what can be found in other trading markets.
Companies that are heavily invested in real estate and enjoy holding onto a physical asset are turning to precious metals investing. Here, they can purchase the physical assets of bullion bars, rounds and coins of the four leading commodity metals.
Entering the Market
Since the middle of 2012, the spot price of gold, palladium, silver and platinum has reached all-time highs. It was then that their markets flattened out, and slightly reversed. However, as the world economies begin to regain their strength, the demand for gold, palladium, silver and platinum have increased. This is because of the huge demand in a variety of industries including automotive manufacturers, medical equipment manufacturers, electronics and the jewelry industry.
Because of the increased demand, and limited supply, many financial advisors are recommending that investors enter the precious metals market, particularly in gold, palladium, silver and platinum. They suggest purchasing bullion bars, rounds and coins as a store value, to be held as a long-term investment. This type of strategy easily accommodates slight fluctuations in the spot price of the four leading precious metals while still generating huge profits over time.
The Benefit of Liquidity
Investors often elect to become involved in precious metals investing because of its liquidity. With the purchase and storage of bullion coins, rounds and bars, investors can easily convert the physical assets into currency, or trade the products for services or goods at nearly any global location. There is no other physical asset, especially real estate, which has an equivalent value of liquidity than holding precious metals.
Precious metals that are purchased through reputable dealers have a guarantee of the metal’s purity. Because of that, investors often make the choice of holding the physical asset and storing it away as a long-term investment, or a way to hand down wealth to heirs.
A Finite Supply
What makes precious metals so “precious” is that they cannot be manufactured from other products. This means that there is only a finite supply of gold, palladium, silver and platinum. With its high demand, and limited supply, there will always be a value to the worth of precious metals.
In addition, many of the world’s mining companies, especially those in South Africa, are struggling with labor groups. Because of that, they are minimizing the amount of precious metals being mined, and in some places, they are even shutting the mines down. As the demands for the precious metals continues to rise, the limited supply of new precious metals brought to the market is expected to cause the significant rise in the spot price of gold, palladium, silver and platinum over the next few years.
Precious metals investing provide a unique advantage to investors when compared to other tradable instruments. The top leading precious metals are continuing to sell in amounts that far surpass historic highs, and are likely to continue that trend for many years.
As many nations continue to manipulate their currencies, and financial markets continue to use investors’ money to play games, it appears as though precious metals investing will continue to be a solid way to diversify a portfolio.