With recent bumps in the road for precious metal investors holding positions in gold, silver or platinum, there has been some increased negativity. However, it appears that some of the recent decreases in value may only be fluctuation due to some apprehension over the already high prices of precious metals.
Still, any thoughtful precious metals investment outlook shouldn’t be based on gut feelings over prices getting high, as they have risen for a reason. Rather, one should base a precious metals investment outlook on substantiated facts. Those seem to support an argument for additional growth.
Demand Should Rise, but Supply Won’t
We cannot simply grow more gold, silver, platinum or palladium. Their supply is limited by what exists currently on earth and how readily it can be mined. As a result, the supply of precious metals can rise a little bit over time, but not substantially enough to offset the ever-growing demand. One key driver of demand in the future should be the use of precious metals in electronics as part of the circuitry. Not only is more technology being used in the United States, Europe and the Western world, but usage should grow rapidly in Asia.
China and India continue to grow into world powers industrially, which means that more and more precious metals will be needed in those countries for electronics in factories and for consumers. While Asian countries do not have a history economically as consumers, this is a likely cultural shift at some point in the future. That means more demand for electronics, and thus a positive precious metals investment outlook.
Global Economic Uncertainty
As much as many would like to forecast that the so-called “Great Recession,” is over and the global economy is back on its feet and ready to begin roaring again, the facts stipulate otherwise. Unfortunately, major European economies such as Spain, Italy and Greece remain on unstable ground. There is a great deal of inflation or risk of inflation, which will cause a great decrease in the value of currency if it comes to fruition. This would drive up demand and the precious metals investment outlook, as it would function as a safe haven for those looking to limit their exposure to currencies.
If inflation becomes a major factor, look for the wealthy in particular to keep minimal cash on hand and hold large quantities of precious metals for safety. That would likely cause major increases in the trading value of gold, silver, platinum and palladium.
How to Begin Investing in Precious Metals
With such a strong long-term precious metals investment outlook, many new investors are learning how to begin to take on exposure to gold, silver, platinum and palladium.
While buying bullion may be the most obvious method, it is also not very realistic for many people due to its prohibitive cost. It also carries with it security issues, as it must be held physically and protected, which is also difficult for the average person to do.
Coins, both antique and minted, also offer investment opportunities in precious metals, particularly gold and silver. There are many factors here, such as a need for expertise in valuation of coins, but they do provide some advantages over bullion as smaller quantities of precious metals can be purchased and they are easier to hold and secure.
The most popular method of investing in precious metals is through exchange traded funds, or ETFs. These funds strive to mimic the price movement of gold, silver, platinum and palladium. Shares, however, are broken down into smaller price units so that they are accessible for the average person to take on an investment.