Investing in precious and base metals.
Are you looking for a new investment opportunity but don’t know where to begin? Try a commodity! A commodity is a basic good that is a raw material or agricultural product that can be bought or sold. This includes metals, water, energy, and food products like corn and grain.
Raw materials are a nearly sure-fire way to protect yourself against inflation. Trading commodities has a long history, much longer than stocks and bonds. The economies of ancient civilizations were based on trading materials. Today, commodities can be a great way for investors to grow their portfolio or protect themselves from inflation.
Some of the most popular commodities for investing in are metals. Whether it’s a precious metal or base metal, metals can either stand the test of time or earn you money by investing in the productions of goods. With precious metals, you can protect yourself from inflation by holding onto gold, silver, or platinum. You can invest in base metals if you want to aid in production industries all across the globe.
Investing in Commodities
Commodity investing involves putting your money into raw materials that are either consumed directly, like food, or used to create other products, like precious metals. Energy sources and natural resources like are considered commodities.
Interested investors can invest in commodities in many different ways, like in physical raw form or using future contracts of ETPs that track a commodity index. Mutual funds are also a viable way to invest in commodities. Buying shares of a company that profits from the value of a natural resource is a great way to invest in a commodity.
Commodities can be utilized for diversification, to hedge against inflation, gain returns, and more.
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!
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.
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.
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.
Base metals are the metals that oxidize or corrode easily, chemically speaking. This includes copper, nickel, aluminum, zinc, lead, tin, iron, and steel. These metals are quite abundant, making the price typically much lower than that of precious metals but are still very important. They are often used in the production of commercial and industrial products. Because of this, they are a popular commodity for investors. Aluminum, zinc, and copper, specifically, were on a rise of 20% at the beginning of 2018.
These abundant metals are used in various products like copper plumbing, aluminum cans, and automobile production.
The price of the metals are completely controlled by economic growth and development of infrastructure. Many experts even gauge an economy’s health on the rise and fall in these commodities because the construction of new buildings, roads, bridges, and consumer products highly rely on base metals.
Investing in base metals is not the same as precious metals because they are a low value commodity in comparison. An investor does not hold physical metal like they would with gold and silver. Instead, base metals are invested in through stocks, ETFs, mutual funds, and futures trading.
Mining operations are set up all around the globe. A lot of these companies are publicly traded in which an investor can purchase stock. The value of said stocks heavily relies on the price of the commodity they produce.
Investors who are optimistic in local and global economies would find trading base metals a good idea. In nations like China and India, economic growth has heightened a demand for base metals. This growth is predicted to continue.
Alpen Partners and Commodities
Alpen Partners Wealth Management International AG, the sister company of Alpen Partners Wealth Management AG, is now a registered investment advisor at the U.S. Securities and Exchange Commission (SEC). Together with our partner Swiss private banks, our company can now offer the full Swiss private banking experience to American clients, both resident and non-resident.
In terms of precious metals, 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.
If you wanted to explore the power of investing in water, Alpen Partners has developed an extensive network of specialists focusing on the theme of water investing. Our goal is to find the best investment opportunity for you, whether it’s in water or otherwise.