Gold and silver have long been acknowledged as precious metals and were highly prized by prehistoric societies. In today’s market, precious metals still have a place in the portfolio of an astute investor. A closer look at the three most liquid precious metals, silver, platinum, and gold, is highly illuminating as we investigate why precious metals continue to be an exceptionally undervalued asset class and appealing investment prospect.
Gold has increased in price 8 times out of the last ten years. This includes the period from 2011 until the end of 2015’s gold bear market. Over the past ten years, gold bars investors have traditionally seen the following returns during this specific, brief, and cyclical time:
- Medium returns of +6.85%;
- Average returns of +5.21%
- The highest recovery of +19.7% in 2011
You can view price manipulation and short-term sell-offs only as “noise.” Still, they also present enormous chances for metal investors to stock up on precious metals and diversify their portfolios at these steep discounts.
As per research, silver is the only commodity whose price is significantly below its 1980 highs and 50% below its 2011 peak. Given the rampant inflation, the extreme levels of global money printing, and the zero percent interest rate policies that have been in place for more than ten years. It is astounding that the price of a “real commodity” is trading at only half the level 41 years ago. This offers a fascinating investing opportunity.
On top of being the most reflective metal on the planet, silver is one of the most unique metals on the periodic table.
Silver’s unique and well-established anti-microbial properties have been shown to eradicate bacteria, fungi, and certain viruses successfully. The silver ions with a positive charge (Ag+) are responsible for this antibacterial activity. Again, these properties are unique to no other metal on the planet.
Silver is the element that conducts electricity the best, followed by Copper and Gold. Silver is famous as the best conductor because its electrons are more mobile than other elements, making it more ideal than any other element for the conductivity of electricity and heat.
These utterly distinct characteristics are crucial when taking into account the industrial demand for silver, which is soaring like a hockey stick even as numbers for global industrial mining production have decreased year since 2016. We only extract 7.7 ounces of silver from the earth for every ounce of gold mined, making the gold-silver ratio for mine production 7.7 to 1.
We are aware that the narrative of platinum is particularly intriguing because two failed states—South Africa and Zimbabwe—produce 80% of the world’s platinum. The collapse of Eskom, the country’s electricity network, as well as growing civil unrest and escalating rioting, has received extensive media coverage. It led to the deployment of 25,000 military personnel to help quell the unrest, which has all had a significant negative impact on South Africa’s economy, which is now falling to new lows.
The global industrial complexes sharply rising demand for platinum contrasts with this immediate and long-term threat to the metal’s supply.
In addition to trading at a price that is a complete 50% below its 2008 top, platinum’s supply-demand situation has deteriorated globally. From now on, it anticipates that this gap will increase every year.
In 2016, when rhodium was selling at US$ 750/oz, our research and models last found anything this fantastic in a supply-demand exchange. With rising demand and declining output, a scenario similar to those currently associated with the apparent and expanding shortfalls in platinum is unfolding. With the price of rhodium climbing to US$ 30,000/oz earlier this year, many of our clients greatly benefited from this trade (+4,000%!). Although we should not anticipate such spectacular returns from platinum, the potential is enormous.
How to buy precious metals?
Let’s examine the choices offered to individuals who want to invest in precious metals.
· Exchange-traded funds (ETFs) for commodities:
Exchange-traded funds make buying and selling gold, silver, palladium, or Platinum simple and liquid. You don’t have a claim on the metal in the fund if you invest in ETFs because you don’t have access to the physical commodity. 5 gram gold bars or silver coins will not be delivered to you in tangible form.
· Common Stocks and Mutual Funds:
Shares of precious metals miners are correlated with changes in the price of the precious metals through common stocks and mutual funds. If you need to understand how mining stocks are valued, staying with funds run by managers with a track record of reliable performance might be a good idea.
· Futures and Options:
The futures and options markets provide liquidity and leverage for investors looking to place significant wagers on metals. Derivative goods offer the most critical potential for gains and losses.
You should keep coins and bars only in a safe deposit box or other secure location. Bullion is undoubtedly the only choice for individuals preparing for the worst, but for those with a longer time horizon, it is both illiquid and downright inconvenient to store.
Do you make good investments in precious metals?
The unique inflationary protection provided by precious metals. They are not susceptible to inflation, have inherent value, and pose no credit risk. Thus, you are unable to print any more of them. Additionally, they provide natural protection against monetary, political, or military upheavals.
Precious metals also offer a low or negative correlation to other asset classes, such as equities and bonds, from the perspective of investment theory. As a result, a portfolio that includes even a tiny amount of precious metals will experience less volatility and risk.
What advantages do precious metals have over stocks as investments?
Precious metals investments have various advantages over stock investments, including being an inflation hedge, having intrinsic value, being free of credit risk, having a high level of liquidity, adding diversification to a portfolio, and convenience of purchase.
Which investment strategies for precious metals work the best?
The ideal approach to invest in precious metals is to either buy the metal outright or hold it in physical form, or you can buy ETFs that have much exposure to precious metals or firms that deal in them.
We are very excited for our metal portfolio clients and the chance for significant returns over this specific investment horizon as silver, platinum, and gold bars revaluations over the coming years are irreversible. A valuable and effective way to diversify a portfolio is through precious metals. Before buying silver bars online, it’s essential to understand your objectives and risk tolerance. It is possible to use precious metals’ volatility to build riches. If ignored, it can also result in significant loss.