These days, investments that help preserve the value of your retirement portfolios are in huge demand. For this reason, investing in precious metals can be a great opportunity to enjoy steady returns with little market risk.
If you’re still on the fence about investing in precious metals, read our list of the 5 reasons why people invest in precious metals, and before you make any decisions read as many company reviews as possible.
- Diversify your portfolio
Diversification has long been considered one of the most basic tenets of successful investing over the long run. Gold has historically shown a negative correlation to the stock market. This means that while the general market is going through an economic downturn, the price of gold may experience a slight bump up in price.
You only need to look at how gold prices outperformed other asset classes during the Great Recession to understand why owning gold can give you some peace of mind.
- Acts as a hedge against inflation
When prices increase yet your buying power is diminished, its caused by inflation. With global economic growth on the rise, you can reasonably expect the demand for goods and services to eventually surpass the available supply, which will increase inflation.
History has shown how gold prices have consistently helped investors out during periods of inflation. Pure stock market investors may shun inflationary periods, but gold investors actually fare pretty nicely.
- Gold acts as a safe haven
Gold can act as an effective disaster insurance against an economic crisis. You don’t ever want a crisis to happen, but in the event it does, gold will act as a shield that will help mitigate the deteriorating effects of the crisis.
In fact, a look at recent economic crises has shown how gold prices skyrocket and help keep investor heads above water. In some cases, the prices of gold even doubles!
- Limited supplies
can lead to higher prices
Precious metals are currently in short supply across the globe. Gold production, in particular, is considered to be nearer its peak than at any time in recent memory. This is due to firms mining less as well there being less research and exploration activity being conducted.
Needless to say, the limited supply levels could be a catalyst that could potentially spike gold price levels to record-highs.
- Increased demand
for industrial usage
Precious metals are present in many of the devices we use today including cell phones, electronics, computer chips, solar panels and even medical devices. It can be hard to imagine a future where we rely less on our electronic devices and smart technology especially given the fact that these devices are increasingly helping us improve the way we live.
Therefore, it’s pretty safe to say that the demand for precious metals will remain healthy for the foreseeable future.
Investing in precious metals is probably not the most effective way to make outsized market gains in your portfolio, however, when used conservatively, it can be a great way to preserve your retirement holdings and shield it from inflation.
Categories: Stock Market