How to Prosper in the Emotionally Unstable Precious Metal Market

According to Ukrainian sporting legend and political activist Vitali Klitschko, Russian leader Vladimir Putin is growing increasingly concerned at how events are unfolding between the two nations. Bound closely by geographical ties and the sheer weight of history, there is now the very real threat that this diplomatic disagreement could quickly spiral into an unsightly and globally influential war. With trade relationships and political ties on the verge of being severed, investors throughout the world are running for cover and becoming increasingly risk averse in their approach.

The Precious Metal Market: An Emotional and Sentiment Investment

Particularly vulnerable to the Ukrainian conflict is the precious metal market, which is so often driven by emotion and sentiment rather than cold, hard rationalisation. This is because, on a fundamental level, metals such as gold and silver serve as a safe haven to investors during times of global economic austerity or political unrest. They therefore onto turn to precious metals as a financial instrument for gain when they concerned or anxious about a specific economic trend, as they look to minimise risk and react to the changing climate around them.

It therefore stands to reason that the current crisis should have caused consternation among investors, and subsequently improved the appeal of precious metals as an investment opportunity. With access to 24-hour and real-time newsrooms, investors cannot head out of the home without being alerted to more worrying scenes in the Ukrainian capital, so there is a natural inclination to become risk-averse and sink their disposable income into tangible and secure options. Fir experienced investors, the trick is to be more considered in their approach and react out of fore-thought rather than instinct alone.

The Truth About Precious Metals as Investment Options

The emotional nature of the precious metal market can cause investors to act out of character, or at least in a way that contradicts their underlying strategy. It can also be extremely counter-productive, especially for individuals who are looking to secure viable returns rather than simply consolidating their position until a preferred set of circumstances emerge. It is easy to overlook the fact that the precious metal market contains a small number of distinct financial instruments, for example, each of which boasts alternative levels of value and worth.

While gold may be the traditionally Omni-potent precious metal, for example, this may no longer be the case in the wake of the conflict in the Ukraine. Silver has already closed the gap in recent times, as its value has soared at a higher rate than gold and the material has developed credibility as more than merely a solid and industrial metal. The latter point is significant, as knowledgeable investors are well aware of the fact that silver now combines the security of gold with far higher returns and levels of profitability. This trend is expected to continue for the foreseeable future, especially with the demand for silver set to overwhelm supply by the time that 2015 hones into view.

Categories: Precious Metals Market

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March 25, 2014 How to Prosper in the Emotionally Unstable Precious Metal Market