Protect Purchasing Power with Gold and Platinum

Hedge and Diversify with Gold and Platinum

A properly balanced portfolio should consist of products intended to hedge and investments designed to speculate. A speculative investment is utilized for the possibility of gains while assuming a possible risk of total loss. For example, stock investments are commonly viewed as speculative investments. A speculative stock investment can go to zero in value. Physical gold and platinum have a comparatively low or negative correlation when compared to stock investments and have never gone to zero in value. When the value of stocks decreases, gold and platinum are likely to hold or rise in value. Physical gold and platinum coins are commonly utilized to diversify and minimize the risks associated with debt. Properly diversifying your investment portfolio is essential to reducing risk and building long-term wealth.   

Past Performance of Gold

Over the past 25 years, gold has risen approximately 700% in value. Gold is currently at an all-time high. The rise in gold’s value is attributed to inflation, geopolitical tensions, and supply and demand fundamentals. Currently, the cost to produce an ounce of gold is approximately $1,050 per ounce. Gold is expected to continue to rise in value moving forward. This trend is expected to continue due to ballooning government deficits, central bank buying, and a concerted effort by other countries to move away from the U.S. dollar in international trade.

Past Performance of Platinum

The platinum price per ounce in 1998 was $340 per ounce and within ten years, platinum reached an all-time high of approximately $2,300 per ounce. Platinum gained approximately 550% in value between 1998 and 2008. Currently, platinum is approximately $1,000 per ounce and the cost to produce platinum is currently $1,150 per ounce. Platinum is an attractive value at this level. When choosing an investment entry point, investors should implement a strategy to buy low and sell high. The current value of platinum appears to be extremely low, and combined with the current supply deficits, should offer a great opportunity for upside potential.

Gold and Platinum vs Fiat Currency 

Platinum and gold are precious metal commodities that will rise in value due to inflation and continued demand from industrial and technological applications. Platinum is extremely undervalued and will need to rise in value to offset its cost to produce and motivate mining companies to produce additional supply. Gold will continue to rise due to the deterioration of the U.S. dollar value. The U.S. dollar is a fiat currency. A fiat currency is not backed by a commodity and its value is solely based on the public’s trust in the government that’s issued the paper currency. The U.S. dollar is currently the benchmark currency of the world. Unfortunately, the U.S. government is inducing inflation by spending borrowed money, and this continued fiscal irresponsibility will push gold and platinum values much higher while devaluing the purchasing power of the dollar. A simple way to describe inflation is to have too many dollars chasing too few goods, services, and commodities. Platinum and gold are precious metal commodities that will rise in value when inflation is present.

The following article is created by Orion Metal Exchange for the benefit of our investors and perspective investors alike. We seek to provide relevant content concerning precious metals and the impact caused by economic and geopolitical trends that will most likely impact your financial future. If you are interested in learning about precious metal investing, call 1-800-559-0088, for a FREE investor kit.

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