Fortifying Your Financial Security: Why Precious Metals Are the Real Wealth Creator

Precious metals have consistently shown throughout history they’ve been highly valued for their rarity and durability. Gold, silver, and platinum, along with other precious metals, have long been used as a store of value. They can also be used to preserve and create wealth over time.

Long-term investors can hold precious metals to protect against inflation, diversify their portfolio to reduce downside risk, and limit volatility. Precious metals are a reliable store of value during a time when elevated inflation is chipping away at the value of the dollar.

Let's look at three different ways that these metals should be part of your financial plan.

Gold bars are a traditional form of gold investment.

3 Ways Precious Metals Help Protect Wealth

1. Investment

One of the main ways precious metals can help protect investor wealth is by simply investing it in. Investors who purchase precious metals can hedge against multiple risks because this asset maintains its value over time and is not subject to the same market fluctuations as other conventional assets like stocks and bonds.

By investing in precious metals, you can preserve the value of your money. This is important because prices in the economy tend to increase year-over-year, also known as inflation. Inflation has become a harsh reality that consumers all over the globe have had to deal with. If it's not addressed, the value of your money can decline. That’s why it's important to invest in a durable asset like a precious metal which can address inflation worries.

2. Safe haven asset

During times of economic uncertainty, investors tend to hold precious metals like gold as a safe haven asset. According to its historical data, gold has held its value during periods of economic volatility.

Financial panics and banking crises are again becoming more commonplace.

For example, as a finite resource, gold’s value can change over time. The gold price tends to rise when supply falls and demand increases. On the flipside, if there was less demand for the yellow metal and more supply, then its market value could decrease.

3. Diversification

Precious metals can also be used to diversify your investment portfolio. By investing in precious metals, investors can spread their risk across different asset classes, reducing their overall portfolio volatility. This diversification can help protect investor wealth in the event of a market downturn or economic crisis.

Here are the top precious metals you can invest in to protect the value of your wealth over time.

Top 3 Precious Metals to Invest In

1. Gold

Aside from coins and bars, investors can also get exposure to gold through gold ETFs.

Gold is the most popular precious metal that investors have poured their money into. Moreover, gold has served as a store of value, otherwise known as an asset that can maintain its purchasing power in the future, as well as a medium of exchange throughout history. Importantly, the yellow metal is a safe haven asset investors flock to during times of economic uncertainty.

Gold has many use cases as well. It is used in jewelry, electronics, and various industrial applications. An important characteristic of gold that makes it valuable is the fact that its supply is limited and demand persists. This consistent supply and demand dynamic allows gold to maintain its long-term growth trajectory.

2. Silver

Silver bars and silver coins come from many different manufacturers.

Second to gold, silver is another popular precious metal investors love to hold. Silver has high demand due to its wide range of industrial applications including in electronics, solar panels, and medical equipment to name a few. And as technology continues to advance, silver will continue to be in demand, which will help boost the precious metals’ value. Silver is more affordable than gold, which makes it an attractive investment for first-time buyers.

3. Platinum

Platinum bars and platinum coins are generally more rare than their gold or silver counterparts.

Platinum is another widely invested in precious metal. It is a rare and valuable metal used in many industrial applications like catalytic converters for cars, chemical production processes, and jewelry.

The supply of platinum is limited and its demand is expected to increase over time as climate change initiatives take center stage for governments and companies around the world. This includes increased production and manufacturing of electric vehicles, where platinum plays a key role. Similar to silver, platinum is a more affordable option than gold, making it a more accessible alternative precious metal investment.

Other precious metals

While gold, silver, and platinum tend to be the most popular precious metal investments, there are others to consider including palladium, copper, rhodium, and lithium.

Copper is one of the most useful and important industrial metals in the world.

Investors who prefer to invest in a variety of precious metals can alternatively opt into a precious metal exchange-traded fund (ETF) or mutual fund. These investment products can be bought and sold on major stock exchanges, instead of owning physical precious metals. Similarly, you can choose to invest in stocks of companies that do business in mining precious metals.

Takeaway

Precious metals are considered a fundamental part of an investor’s portfolio that contributes to wealth creation. Besides their beauty, precious metals are durable, have a store of value, and can be used as a means of exchange. This safe haven asset can help investors diversify their portfolios while preserving their purchasing power during a time when inflation remains high.

Given precious metals will likely be in high demand in the future, but they are limited in supply, their value is expected to increase over time.

Written by Paulina Likos

Read more about investing in precious metals from the experts at Gainesville Coins:

Gold Mutual Funds vs. Gold ETFs: What's the Difference?

Tax on Gold: Don't Overpay Your Gold Taxes!

5 Best Hedges Against Inflation in 2023

Gold vs. Real Estate: Investment Analysis

Best Safe Haven Assets to Protect Your Wealth