Diversifying your investing portfolio is one of the most important things you can do to protect your wealth, because different holdings will change in value at different times. If you’re looking for an asset that can help your portfolio retain value in down market times, as well as protecting your cash from the deleterious effects of inflation, precious metals are the answer.
Precious metals like gold, silver, platinum, and palladium have inherent value that makes them an effective hedge against inflation, and since their worth isn’t linked to the stock market, they can be more stable than stocks and other securities in times of market volatility. You can buy bullion, and even take delivery of your precious metals if you need to keep your bullion handy. Here’s what precious metals can do for your portfolio, and what you need to know to get some of your own.
Diversify and Stabilize Your Portfolio
The biggest reason most investors choose to buy precious metals is because they allow you to diversify into a commodity that has intrinsic value, or value that isn’t linked to external factors like the health of the economy or the value of the local fiat currency. Gold and silver have a long history of being used as currency, and they’re still valued for their inherent qualities. Gold, the most popular precious metal among investors, has value in the jewelry trade, while its malleability, resistance to corrosion, and electrical conductivity make it valuable for manufacturing electronics, among other things. Silver, too, has industrial applications, as do palladium and platinum, two other commonly traded precious metals.
When you add precious metals to your investment portfolio, you’re doing two things: protecting your money from inflation and protecting your wealth from stock market lows. Precious metals aren’t subject to inflation like cash is, so when goods and services get more expensive and currency is devalued, your precious metals will simply increase in value to reflect those changes. Money that you put into precious metals retains its purchasing power over time, and because precious metals tend to get more valuable as time goes by, you could even realize a profit when you finally sell your bullion. Some metals, like silver, will even go up drastically in spot price when industrial demands fluctuate, so if you keep an eye on your spot prices, you stand a chance of cashing in your precious metals holdings for a profit sooner than you might expect.
Protect Your Wealth Against Inflation and Uncertain Times
If you put your savings in the bank, it might be safe from thieves and it won’t be affected by stock market fluctuations, but it will still lose value over time due to inflation. Investing in precious metals is a way to save money for the future without losing purchasing power to inflation. Even if you can only afford to buy one 5-gram gold bar at a time, your money is safer when invested in gold than it is in a savings account, and you’ll see a much higher return, too.
Converting your cash into gold, silver, and other precious metals is also a good way to protect your wealth in uncertain times. In times of hyperinflation, people have used precious metals to purchase what they need. In times of political unrest and social upheaval, people have used bullion to bribe officials and pay for safe passage out of danger. Buying precious metals, especially gold, can be a great way to make your entire savings portable enough to carry with you should you need to leave your home as a refugee. You can also keep gold and silver at home as a financial cushion against bank failure and economic collapse.
Choose Bullion or Securities
Buying bullion may well be the most popular option for investors who want exposure to precious metals. You’ll need to arrange to store your bullion, because gold, platinum, palladium, and especially silver bars and coins take up a lot of space. Most investors choose to have their bullion stored in a precious metals depository, and if you buy from an online precious metals dealer, you can usually arrange to have your metals stored and never deal with taking delivery if you don’t want to. Other options include putting your bullion in a safe deposit box or keeping it at home — as long as you have a safe and adequate homeowners insurance to cover the value of your metals.
You’ll have to pay storage fees to keep your bullion safe in a vault or safe deposit box, but that’s not its only drawback. It can also be hard to liquidate in a hurry. For this reason, many investors choose precious metal exposure through securities like exchange traded funds (ETFs) that trade in precious metals and mining concerns. You can also find precious metals mutual funds or buy stock directly in mining firms yourself. Precious metals securities offer the same protection from inflation and market volatility, but they’re easier to liquidate because you can sell them at any time.
If you don’t yet have precious metals in your investment portfolio, it’s time to get some. Precious metals are a valuable commodity, and an investment in them can protect your wealth, letting you rest easier at night.
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