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A Brief Look at the Precious Metals

Investing in metals can pay off big

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Over the past few years, many financial experts have recommended that investors convert roughly 25% of their portfolio to “hard assets”. These translate to things like precious metals that have been formatted into bars of bullion or into coins as well. What is the appeal of such assets? There are actually many benefits to ownership of any of the precious metals including platinum and silver assets, in addition to the more common gold assets.

Palladium - Palladium Bullion Bars - Buy Palladium Bars - Palladium CoinsFor one thing, most investors might not realize the immense industrial demands for all three of the primary precious metals. Silver is something that is used by the medical, electronics, jewelry, dental, optical, and other industries. It is also used widely for currency, and this means that it has a very high level of all-around demand. It is also something that is going to shortly be in somewhat short supply. This is because the current rate of mining is not likely to remain at pace with demands, and any shortage will lead to increases in value and price.

Platinum is also used by several major industries, with the largest being the automotive industry. This means the same thing as it does with silver – heavy demands and diminishing supplies that translate to increasing values and costs.

Finally, of all the major precious metals, it is always gold that seems to be the one with the most potential. This is because it is viewed as the only form of “real money” due to the fact that it can be used to acquire goods and services almost anywhere in the world. Although it used to be the basis for many currencies and economic systems, most of the economies of the world now follow the “fiat” system instead. This is one that uses extrinsic values applied to currency, but they don’t impact the market value of gold in any way at all.

What this means for an investor is quite simple – any of the precious metals are going to generally guarantee a reliable rate of return regardless of whether they are held for a short or long period of time. This is because all of them will experience increasing market demands and limited supplies, and this all translates to growth. Whether an investor opts to purchase bars of bullion (nearly pure metal) or government-backed coins is almost irrelevant, and the fundamental issue is to be sure that any portfolio has a reasonable amount of hard assets to offset the ongoing level of risk in almost all other forms of investment.

 

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Photos copyright by Jay Graham Photographer