Why invest in precious metals?

By | 26/09/2016

1. Gold as an investment

In all the precious metals, gold is the majority popular as an investment. Investors usually buy gold as a hedge or safe haven against any economic, political, social, or currency-based crises. These crises include investment market declines, inflation, war, and social unrest. Investors also buy gold during times of a bull market to gain financially.

Gold price

Throughout history the gold has frequently been used as money and instead of quoting the gold price, all other commodities were measured in gold. After World War II a gold standard was established when the US closed the direct convertibility of the United States dollar to gold. Since 1968 the usual benchmark for the price of gold is known as the London Gold Fixing, a twice-daily (telephone) meeting of representatives from five bullion-trading firms. Furthermore there is active gold trading based on the intra-day spot price, derived from gold-trading markets around the world as they open and close throughout the day.

2. Silver as an investment

Silver is like other precious metals may be used as an investment. For more than thousand years silver has been regarded as a form of money and store of value.

Silver price

The price of silversilver has been notoriously unstable as it can vary between industrial and store of value demands. At times this can cause wide ranging valuations in the market creating instability. Silver often tracks the gold price due to store of value demands, even though the ratio can vary. The gold and silver ratio is frequently analysed by traders, investors and buyers.

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3. Palladium as an investment

Palladium may be used as an investment. Palladium price peaked near US$1,100 per troy ounce in January 2001 (approximately US$1300 in 2007 dollars) driven mostly on speculation of the catalytic converter demand from in the automobile industry. In recent years palladium surplus condition was caused by the Russian government selling off government stockpiles built up throughout the Soviet Era, at a pace of about 1.6 to 2 million ounces a year. The amount and status of this stockpile is kept as a state secret.

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