Whenever someone mentions precious metals, the first things that pop up in your mind are silver and gold. They have been used as mediums of exchange for more than ten thousand years. Even though their use has a traceable history that spans across millennia, they still have value today.
Smart investors know how to create a portfolio that will include these metals, as well as a couple of other ones. Depending on the timeframe, this investment could be extremely safe or quite volatile. Over the span of decades, the prices of both gold and silver have been going up.
However, if you zoom in on a daily basis, the results might be shocking. The volatility is similar to a crypto bull market. That’s why if you’re willing to invest, it’s best to calculate a decade-long investment at least because there are plenty of reasons to do so. We’re going to go over everything from beginning to end.
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Things to remember
Every investment you make has risks and rewards. That’s why diversification is so important. If you don’t have all of your eggs in one basket, it’s going to be much easier to carry them. When it comes to precious metals, they’re the best hedge against inflation, along with cryptocurrencies and real estate. That is why opening a precious metals resource IRA account is one of the smart portfolio investment diversification choices you can opt to.
Another important fact is that there are other metals apart from gold and silver. That includes palladium and platinum, which have their own place in the tech and medicine industries. Depending on the type of person you are, you can keep the assets in a safe or in a storage, an ETG, or buy shares from mining companies.
Gold and silver
Let’s begin with the top two best investments in this niche. That includes both silver and gold. Both of them have their own properties, which make them unique. Gold is distinguished by the specific yellow color that resembles the sun. It’s also immune to corrosion and rust, and it can transmit electricity as well as heat.
Throughout history, it has been used as a coating for many religious objects. Now, it’s mostly used as jewelry and in electronics. The price of this metal is largely determined by the free market. Geopolitical events don’t have the power they did before in history. That’s capitalism at its best. There are more than 200 000 tons of gold above ground.
This means that it’s been hoarded for thousands of years. The price changes only when large investors are selling. As soon as you notice a downward trend, that’s the best time to get in. On the other hand, when whales are buying, they’re buying a lot because the fees tend to be high. When that happens, the prices of this metal go upward.
There are a couple of reasons that might stimulate you to invest in this gleaming metal. First of all, there are financial concerns related to banks as well as the government. Both of these institutions have failed at their attempts at major loans. The best example of that happened in 2008. At times like those, people look to these kinds of assets as a secure store of value.
Inflation
The same thing is true about inflation. The dollar and the price of gold are like two sides of the same coin. They are both used as mediums of exchange. When one goes up in price, the other goes down. This means that in times of political instability and crisis, the value of gold will skyrocket massively. Seeing that the government keeps printing more money to artificially boost the economy, the bubble is bound to pop at some time.
This will force real estate markets to become negative, and the stock market will go down. The only thing that could keep you afloat will be a stockpile of gold and silver. Now, here’s where this option comes in. Silver is always stuck between two doors.
One of them is the store of value perception, and the other one is the role of industrial metal. This makes it much more volatile, and this also makes it susceptible to supply and demand economics. Developing countries don’t have the option to trade stocks because their financial education is not on the highest level.
This means that they invest their money into traditional stores of value such as precious metals and real estate. This also has influence over the price, as well as the use in microchips, superconductors, batteries, and jewelry.
Platinum
This is the highest-priced metal in the world. It’s the rarest of them all, and in normal financial times, it trades much higher than gold. Plus, it’s not as mined as the other two. There are a couple of variables that influence its price.
First of all, there’s industry demand. It’s mostly used as a catalyst in cars to minimize the polluting effects. With the rise of green energy and electric cars, it’s going to play a vital role in the future. It’s also used in the IT sector, as well as in refining oil and petrol. The prices roughly follow the sales in the automotive sector.
Another important thing is that Russia and South Africa have control over the largest mines. This means that the prices can be artificially boosted or lowered at any time. Most investors agree that this is the riskiest investment, but if you know how to navigate it, this could also bring you the most profit.
