Today’s investment environment seems more complicated and wide-ranging than ever. The array of stocks, funds, futures and bonds that are available, not to mention diverse alternative investments, such as buy to let property, are truly mind-boggling. Yet in the midst of all these new and digital-friendly possibilities, there is one investment type that predates all others and remains as solid a choice as ever.
Going for gold (or silver)
Gold is the archetypal precious metal, and is the one that springs immediately to mind. It is the stuff of fairy tales, of blockbuster movies, even of ancient alien theories. It retains its mystical qualities, but even when we set those aside and look from a purely pragmatic perspective, gold is a compelling investment.
Its chemical properties mean it has diverse industrial applications, and these are growing by the day, particularly in the digital electronics sector. Thus, demand will continue to escalate, while supply is largely dictated by mining reserves.
The same can be said for silver – it is also used in electronics production and, critically, in the growing solar energy market. One of the key differences between the two, however, is that the majority of gold production is primary, meaning it comes straight from the mines, whereas almost three quarters of the world’s silver supplies derive from secondary sources.
The other precious metal that is garnering an increasing following is platinum. Its scarcity is far greater than that of other precious metals – annual production is around one tenth that of gold. Yet its industrial applications, particularly in catalytic convertors, mean demand is also on the up.
Deciding which precious metal makes the best investment involves a number of factors. Silver has the greater short-term volatility, but is far more flexible as an investment – for example, investors can purchase silver bars from Golden Eagle Coins for as little as $20. This makes silver a compelling investment choice regardless of budget.
A hedge against uncertainty
Today, more investor than ever are getting involved in trading Forex as a way to make money. There is nothing wrong with this as part of a broader investment strategy, but the problem with currencies throughout the world is that their value is dictated by so many factors. These include interest rates, consumer confidence and political considerations.
When any of these suffer a downturn, so world currencies have a tendency towards devaluation. Precious metals are less exposed to these kinds of factors. When value is dictated by supply and demand, investors are dealing with far less turbulence. This means that when the broader economy stutters and other investments are not doing so well, more people turn to precious metals, thereby further increasing demand and therefore value.
Diversity is key
Ultimately, today’s investors need to focus on keeping their investments as diverse as possible. Precious metals form a safe haven in times of trouble, and tend to track against wider economic conditions. They should, therefore, form an important component of every savvy investor’s portfolio.