Why Invest In Precious Metals
For a millennium precious metals have been recognized as a true store of wealth. Originally Gold and Silver coins were a form of currency. Now due to their rarity, both Gold and Silver are considered too expensive to be modern-day currencies, however precious metals continue to appeal as a fundamental store of wealth and are considered by investors throughout the world as an essential hedge against economic calamity.
In a coordinated effort over the last decade, central banks along with government treasuries have been printing money whilst governments have been creating uncontrollable amounts of debt and unfunded liabilities (pensions, welfare, government programs and now Covid 19 support and economic stimulus) without any clear guidelines for repayment. This has caused severe asset bubbles to manifest across the full spectrum of mainstream asset classes. What happens when all of this comes to an end and stock markets, property, currencies and sovereign debt are considerably devalued. Where do investors place their capital in order to preserve their wealth and keep it safe during for example an ongoing monetary debasement event.
During this same time period, global central banks have been on a net buying spree of unprecedented proportions of physical gold, since 2010 and for every single year into 2020. This has been the largest gold buying exercise ever seen in modern history and in 2019 the Bank of International Settlements (BIS) re-classified Gold as a Tier 1 Asset within the global financial system.
Precious metals have proven time and time again to be an extremely powerful and effective hedge against economic calamity. Gold has no counter-party liability and as an asset, it can be held by an individual that is free from debt, transparently priced on global exchanges and highly liquid. Precious metals, unlike other investment types, can be exchanged quickly and easily sold in the event that an investor needs cash.
The Auctus Metal Portfolios team has for many years recognized the opportunity of investing in precious metals as both a means of insurance in times of economic strife and also as a means of achieving a substantial economic return, especially from a diversified and actively managed portfolio. The key is in both diversification and active management of your precious metal portfolio; to ensure a heavier weighting in specific precious metals at different junctures in the economic cycle.
Gold is now money and provides portfolios with that hard, tangible, safe and uncorrelated asset protection in times of economic depression. Gold also provides investors with a stable store of wealth, in times where currencies are no longer perceived to have value.
Silver having both investment and multi-faceted industrial applications often experiences an amplifier effect when held in different ratios alongside Gold.
The PGM Group metals derive much of their value from being integral to a number of far-reaching initiatives associated with global warming. Platinum, Palladium and Rhodium have industrial applications in particular linked with the automotive industry and more recently the development of hydrogen fuel cells. These less liquid and less understood precious metals are now considered to be critical in helping to a clean environment as their properties lend themselves to a reduction in pollution (especially in catalytic converters) and will therefore continue to be in high demand as tougher environmental regulations continue to be implemented globally.
When these specific precious metals are combined and actively managed in a diversified portfolio investors can take advantage of robust all-weather portfolios that deliver consistently outsized returns.