Precious Metals as a Form of Financial Security

No American could forget the market crash followed by the subsequent economic slump that occurred in 2008. Prices hit a peak high in October of 2007, began to drop the next day and continued to do so for over a year. Due to the global ties of the United States, international markets also began to falter, leaving the investments of a large part of the world’s population exposed. Those who couldn’t avoid taking a substantial hit are still reeling from the loss of thousands or millions from IRAs, 401(k)s or brokerage accounts. Although the markets are back to a high point and the economy is slowly picking up with more jobs and lower unemployment, those who lost the most are still petrified of another market collapse. For this reason, many investors are starting to consider alternative investment options to protect their assets from another devastating crash.

After confidence slowly returned following the Great Depression, Americans enjoyed several decades of market confidence. Inflation peaked and fell but for all intents and purposes, the American economy and local markets stayed strong. Although this confidence will grow once more in our modern era, it is too soon. Many wealthy investors have chosen alternatives to marketable securities, such as mutual and other fixed income funds, cash investments, or in tangible commodities. For the financially savvy investor, precious metals in particular are growing rapidly in popularity.

A commodity is a good such as gold, wool, coffee beans or oil, that has a value determined by supply and demand and is quantified for its use, not its supplier or point of origin. Commodities are unique in their function as assets; while there is a global market for them and they are bought and sold, they are not traded on a stock market and their values do not rely on a company’s performance. Precious metals are particularly unique and interesting as commodities as they are partially valued by societal and cultural influences. For generations, precious metals like gold and silver have been valued as decoration and a sign of affluence as well as for their practical purposes. Gold especially has a long history of being associated with royalty, nobility and personal wealth. This tradition of beauty and prestige serves well for keeping the values of precious metals high.

Aside from gold and silver, platinum and palladium are also very popular metals for investing purposes. All four of these metals are both rare and incredibly useful. Gold, platinum, silver and palladium are all used to make jewelry, much of which retails for thousands of dollars. However, they all have more practical uses and are in high demand in many other industries outside of the mass consumer market. Gold is known for its conductive properties and is used often in wiring. Palladium finds a common use in catalytic converters. All four metals are commonly used in electronics, medical and dental equipment, energy sources like fuel cells and solar panels, and countless production techniques. This makes gold, silver, platinum and palladium desirable to the general public as well as to specialized engineers and other professionals.

But why precious metals? Why not another commodity, or why a commodity at all? Precious metals, like many other commodities, do not entirely rely on market performance. This is very important to many investors. If the market should drop again, these types of assets will be partially shielded from the blow. Additionally, the value of precious metals will not drop below zero, a quality virtually unique to this particular form of asset. Although prices can be somewhat influenced by inflation, this is also not as intense of a factor as with marketable securities. Additionally, investors can make investments in funds backed by assets like precious metals, which gives investors an equity option if they choose.

When it comes to investing in precious metals, most investors go right for the real thing: bullion and coins. These are available in gold, silver, platinum and palladium so interested parties can easily choose one or mix and match based on prognosis, current price and specific interests. Many sites claim to sell precious metals but be sure to make sure the vendor you choose is legitimate. While bullion is available in many places, coins are a little different. Coins come in far more varieties with varying values and styles to suit each investor’s needs. Vendors like Monaco Rare Coins, provide a wide variety of coins in the different precious metals depending on what size and kind of investment you want to make and offer financial advisors for investors who would like to speak to a professional about his or her investment options. Monaco Rare Coins and other similar services are great places to obtain financial advice regarding investing in rare coins, bullion and the benefits to different forms of investments. Many investors prefer this method due to its security and safety, a factor that gives many people confidence in the protection of their assets.

For investors interested in precious metals but are not interested in buying physical assets, there are many equity options backed in metals like gold or silver. A popular alternative is an exchange-traded fund. Exchange traded funds, or ETFs, in this case are funds invested in precious metals that trade like marketable securities on national and international markets. This is a good choice for investors who like the idea of the high value of gold, silver, palladium or platinum but would like a higher yield than what will likely come from buying coins or bullion. This option is riskier but can be a great addition to the natural resources allocation of one’s portfolio.

No matter your investment plan, precious metals can be a great asset or supplement to any portfolio, whether in equity or as tangible assets. Whether you’re saving for the future or shielding yourself from another market crash, investing in gold, silver, platinum or palladium can be a great strategy to ensure long-term prosperity and a comfortable future.

Precious Metals as a Form of Financial Security
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