Ultimately, each investor must come to terms with his or her own outlook on any given investment option. Unfortunately, there are no silver bullets and nobody can predict the future with pinpoint accuracy. As a result, no matter how much advice and speculation one reads they still risk being wrong at the end of the day. Thus, combining all of the available information on investing in precious metals and making a prediction to act falls upon the investor and the investor alone.
Currently, there is a lot of debate over investing in precious metals, as some people think that they are set to make big gains once again, while others forecast doom and gloom. Both arguments seem to make some sense, so consider both sides.
Instability Means Investing in Precious Metals
There still seems to be a great deal of instability in the global economy and in particular in certain currencies. This is because a number of governments are facing debt crises to various degrees, which can weaken their currencies. Since the risk of inflation is present and should continue to be present, those taking large positions in currencies are likely going to continue investing in precious metals to protect themselves from the risk of inflation.
People who follow that logic are big proponents of continued investing in precious metals, though there are certainly counter arguments as well.
Gold Has Bubbled and Can’t Advance
Others believe that gold has bubbled and will not be able to break through its upper barriers for quite some time. These individuals believe that gold is doomed to bouncing around its current levels, making it a volatile and risky investment.
In addition, they’d counter the above arguments by suggesting that the shaky economies globally are no surprise, nor is the risk of currency problems. As a result, there is certainly a chance that these factors are already priced into the market and could stay that way for quite some time. That would mean that there are no big gains to be made, only the risk of consistent rising and falling of the market.
Don’t Be Too Extreme
One key to remember is not to be too extreme. It is not a good idea to hold onto a portfolio with no exposure to investing in precious metals, nor is it a great idea to hold onto nothing but a precious metal.
Unfortunately, many people have been carried away in recent years and focused in a lot on specific investments, ignoring the need for diversification.
Logic dictates that it still makes a lot of sense to diversify, which is particularly true in a world in which there are strong cases to be made for precious metals increasing in price, decreasing in price, or bouncing around. That is a lot of uncertainty, which is more reason to diversify.
By holding varied positions, one can take whatever the market throws at him or her without taking the absolute worst of it even if things go poorly.
It is also worth considering the age of the investor or the purpose of the investments. For example, the longer an individual may hold a particular investment before needing the money, the more risky they can be as an investor. On the other hand, those close to retirement or other similar expenses may be in a position where diversification or even less risky holdings can make a lot of sense.
Likewise, if one is saving up for a new home or to fund the college education of a child, the closer they are to having to spend that money, the more important it is to reduce risk by diversifying holdings.