As an investor, it is important to be knowledgeable on the market and the longevity of your investment portfolio. Gold and Silver has shown to be great investment opportunities within Precious Metals. Here are 5 benefits to keep in mind, when purchasing your next Bullion.
1. Wealth Preservation:
Commodities like gold and silver are an important alternative to holding cash on fixed deposit. Although the price can move downwards, the long-term trend for Gold is largely positive and provides a secure option for investors with excess cash (savings). Whilst Gold (and Silver) rises in value, cash definitely does not and largely devalues over time due to inflation, tax and low interest rates. (Discover Gold and Silver Krugerrands and Bars.)
2. A Hedge Investment:
In general, if we expect inflation to increase, the value of your cash deposits decreases. However, with a commodity investment, higher inflation leads to more demand for the metals causing the price to increase. We currently have inflation expectations for the US and for the Euro-zone economies and that should underpin the price of commodities.
Another key factor to consider is the value of the US Dollar. Since Gold and Silver has priced in USD, a falling USD is also generally good for gold since it makes the metal that bit more affordable for global clients to purchase. Although the USD is relatively stable currently, there may well be some ‘softness’ to the currency which should also underpin the price of metals.
Thirdly, interest rates in the US also have a major impact. Low interest rates mean that metals become more attractive since the low interest received from banks means the cost to hold gold is also lower. But, if interest rates increase, it could put investors off and they may move to non-metal investments since their return on investment would be greater. Still, we don’t expect any possible interest rate increase in the near-term to have any meaningful impact on the stability of the gold price.
Fourthly, equity (stock) markets in the US and elsewhere have been enjoying a good run. Indeed, valuations for equities are extremely high and should there be any correction in the market, metals may benefit from this. Essentially, metals provide a hedge against this type of volatility.
3. Gold is a Safe Haven:
Throughout the decades, investing in metals has been seen as a safe haven from damaging global events. Since Gold is not a currency, it is not dependent on the normal economic and political issues that may affect a country’s currency. It has therefore maintained and improved its value over time since it is regarded as a scarce asset. Ultimately, it’s an insurance policy against adverse economic and political events that can create major uncertainty. (Click here to find out more about Mr K’s Complementary Safe Custody service)
4. Diversify your Portfolio:
Having disposable or excess cash to invest also means making sure you don’t ‘put all your eggs in one basket’. Clients should be well aware that a diversification or spread across many different asset classes (shares/bonds/metals etc) is desirable. In this way, investor risk is reduced while different sectors provide an alternative and safety net should one sector perform poorly.
5. Inheritance Security:
Investing in metals like coins is a great way to provide an inheritance for younger family members. It’s a safe and secure method of saving for their future while also providing the chance of real capital growth. (Order online today)