Precious Metal Portfolio Diversification

The team at Auctus have always advocated a balanced approach to investing in precious metals. Typically a precious metals investor invests in one precious metal; say for example gold and then vaults it for years. This method yields the investor a moderate return over time and also provides the investor with an insurance policy or better seen as a hedge against unforeseen negative macro events in the economy.

This is however not the way an investor would normally invest across more mainstream investment classes they hold,  where they would prudently spread risk amongst a basket of shares or investment alternatives and then re weight them according to their market performance and taking advantage of price swings. Not surprisingly this tried and true method of investing using diversification and active management should also apply to precious metals.

The team at Auctus, many years ago realized that investors’ returns are consistently enhanced if the investor diversifies their portfolio correctly; over a basket of precious metals. What is essential is that these metals can all be transparently priced in world markets and traded relatively easily when an investor either wants to buy or sell a metal. So we decided to research the following precious metals that seemed to fit this criteria of transparent pricing and relative liquidity while enhancing the portfolio using uncorrelated asset management theories. These metals were, Gold, Silver, Platinum, Palladium and Rhodium.

Whilst these metals all function in different ways and their prices are driven by differing fundamentals we realized that we could build a diversified portfolio comprising all these metals to both protect our investors from downside risk and also take advantage of market opportunities in each of the metals (when the signals were right) by reweighting the portfolio accordingly. The team at Auctus developed several advanced algorithms that then took into consideration the many variables that drive pricing for these precious metals and then actively manage them on behalf of investors. 

At Auctus we have proven using over 50 years of pricing data from the precious metals in our investors basket of metals that investors can earn amazing compound growth from their precious metals investments in times of growth and can also protect them from violent price movements in one specific metal by spreading their risk over a basket of metals.

By correctly diversifying and occasionally re-weighting our clients metal holdings they can achieve exceptional returns while also acting as their essential hedge against negative global macro risks. 

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