Why You Should Diversify Your Precious Metals Portfolio
There’s a saying famous among financial experts: ‘one should never put all of their eggs in a single basket’. Ever wondered why they say that?
It’s because when you invest your money in a company (or a commodity), there’s always a risk of losing your investment. Diversification doesn’t prevent losses, but it does minimize the risk. That’s what makes it all the more important.
There are different kinds of precious metals which include gold, silver and platinum. All of these metals are heavy, ductile and malleable. Furthermore, they’re considered rare, because of which their value is pretty high.
However, the supply and demand of all of these metals vary. This is why the prices of these metals also vary. For example, the price of silver is lower than that of gold. Let’s take a look at all of these metals and their characteristics:
Gold is most commonly used for investment purposes and usually people buy them in the form of bullions and jewelry. The thing about gold prices though is that they’re sensitive to events in the financial markets.
Gold is found in all corners of the world. In fact, the United States central bank has the highest number of gold reserves in the world. It has around 8,000 tons of gold in its vault.
Unlike gold, silver is used for both investment as well as industrial purposes. That’s the reason it’s often referred to as a ‘hybrid’ metal.
Another advantage of silver is that its supply is also higher than that of gold, because of which its prices are also comparatively lower.
Platinum is actually more expensive than gold silver. This is largely because it’s considered to be one of the rarest metals. Platinum is used for both industrial as well as investment purposes. In case of later, it’s most commonly used with catalytic converters.
Now that you have a better idea about various metals, the next step is asset allocation. Make sure you think everything through before investing your money. Pay attention to the economic conditions. If there’s a recession coming, you’ll be much better off investing in gold.