Investing in Precious Metals to Hedge against Economic Turmoil

Investing in Precious Metals to Hedge against Economic Turmoil 5.00/5 (100.00%) 9 votes

Many precious metals have been recognized as universal indicators of individual and government wealth for many different civilizations. Most ancient cultures produced their own precious metals jewelry along with silver and gold as forms of currency.

The last few years, since the economic downturn, many investors have turned to investing in precious metals. This is usually based on their intrinsic value and inability to become worthless no matter how governments or economies are performing.

The Types of Precious Metals

While there are lots of necessary metals used by the commercial industry, the four main classifications of precious metals involve gold, silver, palladium and platinum. Without a doubt, gold is by far the most popular metal and certainly attracts more attention than the other three. However, over the last few years, they have all risen significantly in price. This is usually from the results of a higher demand around the world.

Most investors associate investing in precious metals as the acquisition of coins and jewelry. However, with the emergence of India and China becoming instant players in world commerce, the action of both countries has contributed to a much higher demand specifically as a way to meet commercial and industrial needs.

Gold

Gold is recognized as a crucial element in keeping the electronics industry afloat. Many advanced technological components require gold in their manufacturing process. It works as a perfect electrical conductor and is both chemically stable and corrosion resistant. Manufacturers require gold for its heat shield properties.

Platinum and Palladium

Platinum is the key precious metal used in medical equipment, automotive parts and computers. Palladium is a critical element in manufacturing catalytic converters. Its properties remain stable at high temperatures and can withstand oxidation. Additionally, its highly conductive properties work well as an alternative to using gold in many electronic parts.

Silver

For decades, silver has been the most utilized precious metal in the world. Because of that, its spot price often fluctuates with the demands of different commercial industries. However, the spot price continues to rise over the long-term, much like gold, palladium and platinum.

As governments around the world continue to take dramatic action as a way to safeguard their citizens from severe recession, investing in precious metals will continue to generate profits for individuals that physically hold and store gold, silver, platinum and palladium. One of the key factors that keep precious metals rising in price is the Federal Reserve’s continuing action of inflating the supply of money while keeping interest rates low. Their effort to keep the economy stabilized is a strategy that has yet to prove itself successful.

The major concern over the future of inflation is a key driver that continues to push the commodities market prices even higher. Holding precious metals has proven to be an effective way to spread financial risk during these crucial times of economic upheaval and ongoing war.

For many investors, investing in precious metals represents the safety measure they require to diversify their portfolio, to at least partially hedge against other fluctuating equities.