Due to global volatility surrounding economies all around the world, many financial advisors continue to recommend purchasing and holding onto gold, silver, palladium and platinum. Some advisors believe that the best time for investing in precious metals is now. As a simple solution for hedging against inflation and protecting wealth, the investment of precious metals continues to be a solid answer for diversifying a portfolio.
Precious metals, especially gold and silver, have stood as the symbol of local currency and wealth for most civilizations in the last 3000 years. Many ancient cultures created silver and gold jewelry as a method of bartering or currency exchange. The fascination with precious metals continues to be as strong as ever.
Spreading the Risk
Many governments including the United States and the United Kingdom have needed to take quick and dramatic action as a way to counteract the effects of a severe recession. As a result, national debt crises have been averted for now. In the wake of economic uncertainty, many investors continue to be concerned about future inflation. As a result, investors hold precious metals in their portfolios, because it has proven to be one of the easiest ways to spread investment risk during times of war and the upheaval of worldwide economies.
Investing in precious metals is a unique form of investment especially over paper trading in stocks and bonds. An investor that holds precious metals is placing their faith in a commodity instead of equity, or portion of a business that provides shares or stock in the company. Relying on the increasing worldwide demand for precious metals including gold, silver, palladium and platinum, the investor is betting that economies will be getting better. It is their belief that businesses including the automotive industry, manufacturers and the jewelry industry will flourish in the upcoming years.
Precious Metals Outperform DJIA
For well over the last dozen years, investing in precious metals has substantially outperformed the Dow Jones Industrial Average (DJIA). The precious metal gold spot price hovered around US $280 per ounce at the beginning of the year 2000, and closed at US $1720 an ounce on Valentine’s Day in 2012. For the investor, this represented a 510% total return on investment over 12 years. During that same 12 years, the spot price of silver began at US $5.30 an ounce and closed at US $33.60 an ounce, representing an incredible 534% total return, making investing in precious metals, especially silver and gold, a wise decision.
There seems little doubt that the current demand for precious metals will continue to rise. While current movements do not necessarily indicate a dramatic price increase in the near future, it does however show an ongoing trend. All indications are that active mining for more precious metals still does not have the ability to meet the demand.
For anyone interested in investing in precious metals, it is always important to perform their own research. Upon deciding on buying silver, gold, palladium or platinum, investors can purchase bullion or coins and store them safely for a long-term return on their investment.