Why Invest in Precious Metals?
11th May 2018

Precious metals are just one kind of commodity, and commodities are very important to many of the world’s economies and underpins their financial structure. There are many reasons why they’re considered an important part of an investment portfolio:

  • No counterparty risk – once you have the physical metal in your possession you don’t need another party to fulfil a contract (unlike stocks, shares, bonds and ETF’s as they require another party to fulfil their end of the deal)
  • No credit risk – you can realise the core asset at any time
  • Cannot be inflated – you can’t make precious metals, they are a finite asset
  • Easily transferable – they are recognised as a store of wealth around the world, and considered a safe haven
  • Spread the risk of a diverse investment portfolio

Just like any investment however, it is important to consider the risks involved.

There are many ways to invest in precious metals, in example, ETFs, common stocks and mutual funds, futures and options, bullion and certificates. The major benefit that purchasing physical bullion has over the other options is that you know the metal is really there, you have legal title to it, and there’s no counterparty risk – certificates for example, are merely paper, so if there was a real disaster it may be hard to exchange its value.

Although precious metals do fluctuate in price, they are well known for holding their value over time. This can be shown in the graphs below where the performance of gold, silver and platinum are displayed over a 10 year period:

Gold

 

Source - LBMA 

Silver

 

Source - LBMA

Platinum

 Source - LBMA

 

*At the time of publication this information is correct. Please note we are unable to provide financial advice, so we recommend that you speak with a financial advisor regarding your options. 

 

Sources

https://www.investopedia.com/articles/basics/09/precious-metals-gold-silver-platinum.asp

https://www.economist.com/blogs/economist-explains/2017/01/economist-explains-0

https://www.royalmint.com/invest/bullion/discover-bullion/why-invest-in-bullion/

http://www.lbma.org.uk/precious-metal-prices

 

 

 

back to top