Using Precious Metals to Create Hedges against Inflation
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Precious metals have long held the reputation of being a reliable measure of protection against the purchasing power.
During inflation, potential damage to the investment portfolio is always expected, which means investors need to prepare for mitigation.
Gold and various other precious metals offer a hedge against economic uncertainty by acting as real assets with intrinsic value.
Precious Metals: Hedge against Inflation
Over the past few decades or even centuries, gold and silver have acted as commodities that offer intrinsic value.
This means that during periods of inflation, when other investments may be suffering losses due to currency devaluation, precious metals will retain their value.
In fact, inflation may directly lead to an increase in the prices as the demand for key commodities increases. In the last two years, there has been a rise in the average price of gold and other precious metals.
There’s one thing to remember, though! Like any other investment, the prices of precious metals fluctuate.
Buying at the right time is just as tricky as using them as an investment to make a profit. While gold and silver aren’t traditionally money-making investments, palladium presents a different story.
Recently, palladium has made a comeback in the investment portfolios as its value has increased and is likely to increase through the next year.
The demand for palladium has been driven mostly by the automotive industry, based on its application in car manufacturing (catalytic converters used for reducing harmful emissions).
Precious Metals and Tax Concerns
For better profits in precious metals investment, it’s best to hold them in an individual retirement account (IRA).
The IRA account can lower the taxable income and profits, which means that investors can use the accounts as part of their retirement/investment portfolio.
Choosing the Right Investment Type
Investment in precious metals goes beyond coins and bullions. Exchange-traded funds (ETFs), mutual funds, stock in the mining companies and physical ownership of the metals are just a few ways of investing in precious metals.
It’s best to choose investment options other than physical ownership if you don’t have storage or a secure vault to keep them in.
The type of investment for maintaining a hedge against inflation also depends on how diversified each investor’s portfolio is and whether the specific type of investment offers better profits during an economic slump.
If you’re investing in gold bars or silver coins and need immediate guidance on their purchase, storage and liquidation, talk to us at 1-800-559-0088.
With our 50 years of experience in the precious metals industry, we can offer you expert advice and streamline the investment process from purchase and storage to transactions and taxation process.