3 Reasons Why You Ought to Invest in Precious Metals

Throughout history, we have been fascinated by and in love with gold and silver. Many societies have seen them as the ultimate symbols of wealth, luxury and success. However, investors are fast realizing that these metals aren’t just symbols of idealized wealth but can help produce real wealth by acting as alternative investment vehicles. What is more, gold and silver are far from the only precious metals worth investing in. Platinum and palladium can both also help add to your wealth and protect it.

1.      Intrinsic Value

Unlike many other asset classes during the current economic uncertainty, precious metals are still valuable. This is partly because such metals will always have an intrinsic value, no matter what the economic conditions are. As the saying goes, gold has never been valued at zero. Although the way in which the prices of gold and other metals fluctuate daily can seem alarming at first sight, remember that all assets fluctuate in this way. The realities of inflation and deflation show us how drastically cash, perhaps the most common asset of all, can fluctuate in value. Indeed, at points in time when it’s feared that inflation will occur in the near future, the price of alternative commodities like precious metals goes up, as such assets become more desirable. With each global financial crisis that comes along, more people are converted to the idea of paper money being potentially worthless in the future, including many experts in investment circles. All investment is a gamble but in even the most extreme financial crises, precious metals are actually the safest bet for protecting your wealth.

2.      High Demand

Demand for precious metals will always be high because of their various uses. After all, people will always need to mint coins and will always want to make jewelry. These are not the only things metals are used for, however. Various industrial sectors also have their uses for these materials. The emergence of the BRIC (Brazil, Russia, India and China) economies on the global industrial and economic stages guarantees that precious metals will continue to be used for these industrial purposes, indeed increasingly so. For example, as gold is a vital ingredient in many a high technology component, it’s much sought after by the electronics industry. It also makes for a great electrical conductor and a very effective heat shield. Qualities such as stability and corrosion-resistance make it all the more desirable in an industrial context.

Meanwhile, platinum is used in the manufacturing of medical and automotive equipment and computer parts. Palladium, being softer than platinum, has its own specific uses. These include raw material and photo processing, fuel cells and the purification of water, oil and natural gas.  Silver is used in batteries, bearings and moving parts, mirrors and coatings, medical equipment, surgical tools and electronics. It is also used for brazing and soldering and is increasingly becoming an important part of the solar energy movement, thanks to the use of silver paste in the majority of crystalline silicon photovoltaic cells. With metals having so many purposes, there will always be a lot of people who want to buy, so it’s worth keeping metal in your portfolio at all times.

3.      Diversification

It’s important to diversify your portfolio in order to give yourself both security and flexibility. By spicing your portfolio up by adding precious metals into the mix, you’re reducing risk and limiting volatility. Not all asset types will move up or down in price at the same time or to the same degree. If you have an equally-weighted portfolio, the damage done to you when one of your investment vehicles crashes in price will not be as severe as it would be if your portfolio was dominated by that one asset class. Indeed it pays to even diversify the precious metals of your portfolio—be sure to keep more than one type of metal as part of your portfolio at all times. Just as gold can perform better or worse than real estate or art on any given day, it can also perform differently to silver and all the other precious metals.

Precious metals aren’t just there to look pretty but can add real value, flexibility, security and diversification to your portfolio. As long as the consumption of precious metals exceeds production and as long as other asset classes also have an element to risk to them, investing in precious metals is the smart thing to do.

Recommend Reads:
1) Why Buy Silver Now?
2) Gold Investment Basics: Simple Ways to Invest in Gold

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10 comments

  1. R. C. Laguda says:

    I believe that it is a very wise decision to invest in precious metals rather than investing solely on stocks and other interest bearing notes. You can never go wrong in the process, it never devaluates, it increases its potential value and as long as there is a high demand, it will always be a sure win for investors. Thank you for the article. Very informative.

  2. Violet Rocher says:

    I agree with everything that you wrote.

    Precious metals do have intrinsic value and that you can be sure your money’s worth is always rising as time goes by.

    And people really continue looking for ways in using these precious metals, especially applying it in industrial and medical purposes, although they are rare in nature.

    The natural properties that these metals have make it possible to be applied in such purposes.

    Plus a balanced portfolio would make sure that no matter what happens, you always have a secured value in your hands shielding you from any possible economic turmoil.

  3. A.Jane says:

    Precious metals have historically been used as a form of currency or as investments. They’re something solid and lasting that will always have value because they’re always rare. It might be worth considering, especially today, when other investments can be so volatile. At least it would be a good way to diversify your portfolio. That way if one thing crashes, you’ll still have options available.

  4. [...] Reads: 1) How to avoid rare gold coin scams 2) 3 Reasons Why You Ought to Invest in Precious Metals If you enjoyed this post, please consider leaving a comment or subscribing to the RSS feed to have [...]

  5. [...] investments. Some businessmen invest their money on buying gold because it is stable and the value generally increases over [...]

  6. zakaria says:

    Investing in precious metals can be a good way to guard against inflation and diversify your portfolio, but investing in the physical metal has a number of inherent disadvantages. If you invest in gold bullion or gold bars, you will need to insure that investment and find a place to store it. Investing in gold coins introduces the risk of high markups and even fraud. Fortunately, you have other ways to invest in precious metals without facing these types of barriers.

  7. scott says:

    Those are three outstanding points! Continue to keep writing and producing such helpful and original materiel.

  8. Niloy R. says:

    This open economy has opened lots of sector to invest for the investors. Last few decades, the worse time was all over the economy. Where all other sectors have been collapsed, there is only one sector which has been found unaffected by this ongoing recession. Investing in the precious metals is, I must say, a wise decision to utilize the best of someone’s fund. This article gives them the clear idea why the investors will invest in the precious metals.

  9. [...] Investing Soaring gold prices and turmoil in the economy have many investors considering the benefits of investing in the lustrous yellow precious metal. Gold has historically held a tangible value and has been [...]

  10. Kristine Joy Escarilla says:

    Investing in precious metals is indeed a smart way to add in your portfolio. This is a very significant way to balance your potential for gains from your assets which are included in your portfolio. Since assets such as stocks, mutual funds, and the like are volatile, it is always safe to include precious metals which are solid and stable in your portfolio. This is so should markets crash, your precious metals will offset the losses that might be incurred from other assets. Also, it is good advice to consider investing in other precious metals such as silver, palladium, and platinum, and not in gold alone since different precious metals may perform differently at some point in time.

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