For as long as human civilizations have existed, so has the trade in precious metal. Regardless of the culture or the time period, people have always perceived value in metals such as gold and silver. Even today, you can find it in investment portfolios.
Investing in precious metals is quite popular as it has no credit risk and can’t be inflated. Further, they’re also a safer bet when in times of political or financial upheaval.
From an investment perspective, precious metals have a low or negative correlation to other assets like bonds or stocks. As a result, even if you have a little bit of precious metals in your portfolio, you will reduce both risk and volatility.
But which precious metals should you invest in? You can invest in many precious metals like platinum, silver, and gold. There are also many reasons to buy into it so keep reading and find out more.
Gold has been popular throughout the ages because of its durability and malleability. But it’s not just constrained to coins, bars, or jewelry. It can also be incorporated into electronics and industrial applications.
The markets that determine the value of gold operate 24 hours a day, almost 7 days a week. Unlike commodities, the value of gold isn’t determined by supply and demand. Rather, its value is determined by sentiment.
This is the result of hoarded gold far surpassing new mine supply. This means, when those hoarding the gold decide to sell, the price will drop. When they decide to buy, the new supply is quickly bought up and this drives up the price.
When it comes to precious metals, the value of silver is fluctuating. So the trade in precious metal like silver will be much more volatile than gold.
Although hoarders have more or less the same effect on the price of silver, the industrial supply and demand equation for silver has the same influence on value. So it can also rise and fall based on new innovations.
Just like other precious metals, platinum is traded around the clock. But its value is usually much higher than gold during periods of instability. This is because this precious metal is much rarer, even though it’s also considered to be an industrial metal.
In recent years, the auto industry’s drive to reduce emissions and computer manufacturers needing it to build components have been driving demand for this precious metal.
Exchange traded funds exist for the trade in precious metal, but platinum can only be accessed through the London Stock Exchange (LSE). These metals are a great way to diversify your portfolio but as a result of volatility, you shouldn’t leave it unchecked.