If you are looking for an investment that will stand the test of time, precious metals is the avenue to take. Many smart investors continue to keep gold in their portfolios.
One of the biggest uses for precious metals is for diversification. The trick to diversification is finding investments that are not correlated with one another. Investors still use precious metals to hedge their funds, as a safe haven and reducing volatility and risk. A hedge investment is one that can offset the losses in another asset class.
Which precious metal is right for you? Continue reading below to learn about each precious metal and which works best for you!
The precious metal gold has had an exciting history, beginning in 3500 BC, while worked and smelted by the Egyptians. The Chinese began using it as currency in 564 BC and it was later used by Ancient Greeks, Romans, and later by the Spanish – as well as a metal-based currency in early Great Britain.
By the 19th century, the world was operating on a Gold Standard that lasted until 1914. Although most worldwide currencies are no longer backed by gold, it is still quite important to the world economy. One reason for this is simply that gold has maintained its value since it began to be utilized as currency. The same thing cannot be said about paper currencies.
Historically, gold has always done the opposite of what stocks and other financial instruments have done. For example, the 1970s were not strong years for stocks, but gold was thriving. In the 1980s and 90s, stocks were up but gold was down. When the 2008 financial crash occurred, investors were leaving behind the dropping stock market and began buying gold again.
Investors will often buy gold to hedge against the decline of a currency, for it is a great defense against inflation. The price of gold tends to rise as the cost of living goes up. For over 50 years, investors have watched gold prices go up as the stock market crashes in times of high inflations. Research has found that gold is the best hedge against a stock market crash. In fact, gold prices increase dramatically after a crash. Stockholders will often sell their stocks and buy gold.
Like gold, silver also holds its value. Other benefits of silver include the fact that it has never been defaulted on. By owning physical silver, there are no default risks, which is not something that can be said about all investments.
Silver is one of the best forms of money because it can’t just be created, like paper money or digital currencies. It has never been defaulted on and there is no counterparty risk, unlike stocks or bonds. In fact, silver has been used as currency more often than gold.
Keep in mind, we are talking about physical gold, not ETFs or certificates. Owning physical silver is beneficial over ETFs because it is a hard asset. There aren’t many investments that you can carry in your pocket, and precious metal is one of them. With physical silver, you are hedging yourself against any kind of hacking and cybercrime that can affect digital investments.
Gold is more expensive than silver, so an individual would need to buy more silver to protect the same amount of money, but it would be easier to make smaller purchases. When it comes time to sell the silver, you wouldn’t have to sell a full ounce like you would in the case of gold, because the denominations can be smaller.
In addition, there are numerous industrial uses for silver in almost every major industry, from electronics to medicine to solar energy. The metal is significantly electrically conductive, thermally conductive, and reflective. We would not have a lot of the amenities we have today without the use of silver, including cell phones.
Lastly, the world demand of silver is growing. Most major government mints are experiencing a rise in sales of silver, especially in China and India.
This last precious metal is also traded around the clock on global commodities markets and is usually more expensive than gold in times of market and political stability. This is because the metal is rarer.
Platinum is similar to metal in that it is an industrial, highly used for automotive catalysts, used to reduce harmful car emissions. Jewelry, chemical refining catalysts, and computers also raise the demand for this precious metal.
Gold is speculative. It has gone through, and will continue to go through, highs and lows. It can be a risky choice to put all of an investor’s money in. Like every investment, there are risks and rewards. Though gold can’t make any promises as a lone investment, investing in gold has been, and will remain, a solid choice in diversification of your portfolio – which should include other commodities like oil, real estate, and other hard assets.
Gold bars can be stored at one of our partner Swiss private banks, either in the main vault of the bank or in a private safe deposit box. We also offer our clients the opportunity to store the precious metal bars in private vaults outside the banking system, either in a Freeport or at ultra-safe private vaults in Switzerland.
Swiss banks have historically been some of the most trusted banks globally. The economy is so strong that there is no national deficit. The Swiss income exceeds its expenses, so the currency is fully backed by a self-reliant economy. The country also boasts low unemployment, high per capita income, and a popular banking destination utilized worldwide.
Alpen Partners has connections with some of the most prestigious banks in Switzerland that have trustworthy reputations for managing wealth and holding your gold. Connect with us if you have any questions about gold as an investment or need a bank to hold your gold.
No matter the problem, Alpen Partners will handcraft a solution for you. We know that there is no one-size-fits-all when it comes to financial success. Our approach involves working with our clients to make a unique plan to meet their needs. Rest assured that we will work hard to guide you through the process of meeting your financial and personal goals.
Contact us to enhance your financial plan today.