Hedge Your Portfolio by Investing in a Precious Metal Market

Precious metals like gold, silver and platinum has always been universal symbols of wealth for civilization. Years have passed but fascination with the precious metal remains as strong as it always has been. In ancient times, money was crafted with gold and gold jewellery is still famous in many cultures. Although gold is always in the limelight but it is not the only precious metal in which you can invest. There are three other metals that are known for major investments. These are silver, platinum and palladium. The price of these metals has increased over the past few years due to their heavy demand.

Investing in a precious metal market has been grabbing a lot of attention in recent years. Based on the impact of financial market in the global economy over the past few years, it has become very important to invest carefully in order to safeguard yourself from the downside risk of the market fluctuations. However, concerns to control future inflation are pushing the commodity prices in an upward direction but by investing in a precious metal market, you can spread the risk of your portfolio during economic instability especially when inflation threatens currency values. Many investors invest in a precious metal market as it offers diversification and also hedge against equities.

Investing in precious metals has offered a hedging benefit by providing a protection against sudden and unexpected financial crisis. In times of natural disasters and events such as, bankruptcy of major companies and banks, defaults on derivatives contracts, bonds and insurance contracts; traditional financial assets usually suffer a downside risk whereas, the price of precious metals rise dramatically. By investing in a precious metal, investors insure their investment portfolios and also earn healthy profits on these investments. However, you should seek guidance of Your Personal Financial Mentor  when you plan to invest in a precious metal market because a professional advice is important when you are investing in a financial asset.

Many successful investors, who have been investing in a precious metal market for years, recommend having at least 5% of investment in gold and other precious metals in order to achieve a well diversified portfolio. This can be in the form of mutual funds, exchange traded funds, mining stocks and shares and investment trusts. Some of it should also be in the form of physical precious metal, such as bullions and gold coins. Investment in a precious metal market increases volatility and hence, it should not constitute a significant part of an investment portfolio. But it acts as a useful insurance policy for an investor to hedge against economic disasters and inflation.

Categories: Precious Metals Market

1 reply »

  1. The historical price graph of precious metals has been nothing short of impressive over the decade. You can see it here meritgold.com/market-data. In fact, in the recent times, gold and silver have outperformed NASDAQ and S&P 500. Though the prices have been volatile of late, precious metals are still a preferred investment asset to hedge ones portfolio against economic turmoil.

Leave a Reply

Your email address will not be published. Required fields are marked *

September 12, 2013 Hedge Your Portfolio by Investing in a Precious Metal Market