5 Reasons Why People Invest in Precious Metals
Are gold and silver a good investment? Everyone has their own reasons for looking to invest in precious metals, the most powerful reason being they are well known for holding their value over time - especially in times of economic uncertainty.
Here are five top reasons why many investors choose gold and silver:
1. A Tangible Asset
Real physical gold and silver can be held in your hand. How many other investments can this be said about?
Precious metals can’t be erased or wiped away unlike the digital assets such as the computerised bank accounts and credit cards we use these days. An online hacker can’t erase a gold Sovereign coin from existence, it will continue to sit in your pocket wherever you choose to go.
Gold and silver can’t simply be destroyed by fire or water and doesn’t take any upkeep or maintenance. With physical bullion, it’s more than a few 1’s & 0’s in a computer or a paper symbol with a promise of value – it’s real, actual, physical wealth.
2. Real Money
It has long been said that physical gold and silver are the ultimate form of money.
Precious metals can’t be created out of thin air like digital and paper forms of money - there is only so much gold and silver in the world - and they have both been recognised as money across the world for longer than any form of currency in history, and remain so today. It all comes down to the fact that precious metals are instantly recognisable and can be transferred easily – every country speaks the language of gold and silver. The price of gold and silver may fluctuate, but their value remains timeless.
While paper money may lose value over time, especially in times of economic instability - and when other markets struggle, precious metals have the amazing ability to hold and often appreciate in value.
Both gold and silver are practical when it comes to both buying and selling. Both are available as small coins and bars, and investments can be easily stored and/or broken down to use as and when required. Gold and silver bars and coins can be sold virtually anywhere in the world, due to their instantly recognisable store of value.
Assets are a great way of protecting wealth but selling them back to liquidate funds can be a key consideration when investing. Gold and silver can not only be sold almost instantly, but little knowledge about the precious metal is required to invest in the asset, and more information is widely available on the product.
4. Increasing Demand
Global demand for both gold and silver is growing. Many places see gold connected with the culture - India is currently one of the largest gold consumers in the world thanks to their love for jewellery, particularly during wedding season. China has high demand for gold, due to gold bars being a traditional form of saving and is often given as gifts. Demand is also growing due to investors, as many more of us are now seeing that it can be a positive addition to an investment portfolio.
Demand for silver is also growing, partly due to its use in many major industries such as medicine and electronics. With the world’s population growing, sooner or later demand meets supply and eventually, it may not quite match up.
In times of global financial or political instability, the cost of living tends to rise, and we see precious metal prices climb and often used as a hedge against inflation.
When world tensions are heightened, people flee to the safety of gold and silver, as they often outperform other investments. For example, the summer of 2019 has seen gold prices soar to record breaking heights. The Pound weakened and markets became increasingly concerned about the possibility of a No-Deal Brexit. This, as well as interest rate cuts and the US trade wars, all contributed to low confidence in governments and saw gold prices in the UK rocket to their highest ever.
Investors use gold and/or silver to protect wealth for their future. In a world of economic uncertainty and mounting global debt, they are seen as a safe haven offering many advantages that other investments cannot. Holding physical gold coins and bars can provide ultimate control over your own wealth, offering a timeless safeguard against financial crisis. They can be a way to preserve wealth for the future, and often passed on from one generation to the next.
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.