Know Your Metals—How Much Is Your Coin Worth?
Throughout human history, precious metals like gold, silver, platinum and palladium have held far greater value than other base metals. Due to their useful properties and pleasing appearance, they are widely used for jewelry, electronics and medical purposes. However, their primary use has been as a medium of investment to store value.
Investors diversify their portfolios by investing in precious metals to hedge uncertainty and inevitable condition of the market. However, before investing in these metals completely, you should understand factors that affect their price and value.
Demand and Supply
Like all commodities, demand and supply principles determine the price of precious metals. Since they’re finite, the supply is limited. Therefore, demand plays a greater role in determining its price than supply does. An increase in their demand causes the price to increase and vice versa.
For instance, a shortage of workers at a gold or silver mine can reduce the supply, while the use of these metals for new equipment such as solar panels would increase the demand. Both factors will lead to a surge in gold and silver prices.
Currency devaluation occurs when a currency loses its value compared to other currencies. When a currency devaluates, precious metals especially gold, are seen as a safe investment option. As these metals are not controlled by any institution or governments, they tend to hold their value even in the face of an economic crisis.
So when a currency’s future is uncertain, and investors fear that it might devalue, they try to find a way to keep their assets intact. They start investing in precious metals beforehand, in case the currency loses it worth. This drives up the demand for precious metals, causing its price to increase.
Inflation and Struggling Markets
During inflation, the purchasing power of buyers decreases. Many investors prefer investing in gold instead of currency. It prevents them from purchasing-power erosion due to the rising prices. This leads to a higher demand for precious metals causing their prices to increase.
Struggling markets is another factor that causes the price of precious metals to increase. When markets are struggling, stock markets crash causing stocks to lose their value. The tough economic period forces investors to invest in something more tangible that is not easily affected by economic conditions.
Investing in precious metals such as gold and silver is a means for investors to safeguard their assets. High demand for these metals causes their price and value to increase.
Investing in gold and silver is a smart way to protect you during tough economic times. If you’re looking for the best gold investment companies and dealers, then look no further. Orion Metal Exchange can help you get the best precious metal investment deals. Call us now at 1.800.559.0088 for more information.