What are the benefits of investing in gold and silver? Are those benefits enough to compel one to consider purchasing any of the two precious metals? Welcome to yet another article in which we shall be discussing precious metals and what we stand to gain by putting some investment funds into them. I hope that by the time we are getting to the end that you will have learned enough to help you decide on the way forward as far as investing in precious metals is concerned. Read on to find out more.
For many centuries, gold and silver have maintained their popularity as very prized assets. Even in the present-day world, the idea of these two precious metals as prized assets has not changed. Beyond that, they have been seen to perform well even during times of economic instability.
This is the main reason they are perceived as one of the best assets to have in one’s portfolio. Most long-term investors hold about 5 to 15% of their wealth in gold, to ensure that they are shielded from the downsides of an economic downturn.
The benefits of investing in gold and silver
The demand for precious metals is high
As the world is gradually evolving, most industries are also evolving to ensure that they remain afloat. One such industry is the gold mining industry. Miners are currently staying away from massive mining projects due to safety concerns, economic uncertainty, and environmental factors. This generally means that the supply of precious metals to the market is not as high as it previously was. Besides, mining projects are very capital intensive, which is something that makes many miners shy away from following aggressive mining strategies.
As more people rise from poverty, they are realizing that they can afford some of the luxurious pieces of jewelry sold in the fashion industry. More industries are also incorporating gold and silver into various technologies, with the hope of improving their overall efficiency. Evidently, there is an increase in the demand for precious metals, which should warrant an early purchase, so that one can sell at a high price later on.
The assets are inflation-proof
Unlike other assets that cannot hold their value during inflation, precious metals happen to be inflation-proof. Whether the value of the US dollar or decreases significantly, gold and silver do not respond dramatically to such adjustments.
Historical analysis has time and again proven that precious metals perform well more so during times of economic devastation and financial depression.
The same cannot be said of other physical assets, which happen to depreciate with time, or whose profit-making potential is jeopardized by inflation.
Gold and silver have their intrinsic value, which is one of the main reasons why they have held their value over many centuries. Wherever you are in the world, gold and silver remain gold and silver.
Gold and silver are valued in every corner of the world- a silver ring will maintain its value whether in Australia or in the USA, owing to the universality aspect. If you, as such, invest in precious metals, you can have the much-needed financial security, regardless of your location in the world.
Another reason for investing in precious metals in the present-day world is liquidity. Depending on the type of gold and silver that you purchase, you are likely to get higher liquidity in comparison to other investments. With bullion coins, you can easily get buyers in today’s market. In addition to that, owing to the universality aspect, you can get market for them wherever you go.
If you hold precious metals in their physical form, you do not need any type of paper contract to make them whole. You do not need a middleman or other party to fulfill a contractual obligation. This is because a precious metal investment is the only financial asset that’s is not simultaneously a liability to its owner.
Such is a very important aspect, owing to the fact that gold will the only asset standing when financial bubbles pop or when financial crises strike. Precious metals are a powerful tool to be in possession of when you realize that things are going wrong in your country or economy.
This also implies that the value of gold will never go to zero. It has never happened in the 3000+ years it has been around. Such is a powerful feature to consider as an investor, especially if you have been a shareholder of stocks that devastated investors such as the Bear Sterns, Enron, and Lehman Brothers.
Precious metals can be private and confidential assets
There are not many assets that you can say this about in the entire world. If you are looking for some privacy, physical precious metals are worth considering. You will still have to report the gains, for the purposes of filing taxes, but if you choose to, you can own precious metals without anyone knowing that you own them.
No specialized knowledge is required to invest in precious metals
Investing in physical precious metals does not require that you have any special skills or training. The same cannot be said of investors who purchase and sell paintings, stamps, baseball cards, or antique furniture.
While some investors decide to go the collector coins route which may require a significant amount of background research, you do not have to do that with gold bullion. Purchasing gold bullion is rather straightforward, and if you are not sure where to get started, here are some recommended companies from which you can get help:
Thank you for making it to the end of this article in which we have looked at what the benefits of investing in gold and silver are. Hopefully, you learned a thing or two, and that you now know whether you will take at what the precious metal industry has to offer. Let me know if you have any questions or concerns about today’s article- drop them in the comments section and I will get back to you ASAP.
I wish you well,
Eric, Investor and Team Member at Gold Retired!