Precious metals such as gold and silver have been widely respected throughout the world for their value as well as beauty. In fact since time immemorial gold and silver have been the ultimate criterion of wealth with gold coins being traded as a form of currency for almost 3,000 years. To this day gold and silver are considered excellent investments both in Australia as well as the rest of the world.
1. Precious metal vs. paper
Investments that have been made in a volatile share market (and that includes mutual funds, money-market funds, and the shares of different companies even blue chip stock) are often thought of as reasonably ‘safe’ investments. However, nothing could be further from the truth, since the inherent risk in the stock market is part and parcel of its business.
Let us take the example of the Trump electoral victory on the ASX. (Australian Stock Exchange) When the results were announced the market went though the floor, only to rebound within hours. Such massive fluctuations can make and break people. While it is true that precious metals market may be bearish or bullish but the overall trend is that it is more stable than its stock market counterpart.
In fact, if we were to look at it in the historical context, from the great stock market crash of 1929 that ushered in the great depression all over the world including Australia to the impact of ‘Brexit’ (The British exit from the European Union) on the ASX, the volatility of the stock market is a regular feature of life.
2. Hedge against inflation
Investing in gold and silver provides a certain level of protection from inflation. The market may tend to go up and down, but unlike inflation ( currently measured at between two and three percent in Australia) in the long run, precious metals tend to remain stable and do not lead to a steady erosion in the value of your paper money.
3. Gold and silver retain their value
Unlike liquid cash, coins or other assets such as property, gold and silver have consistently maintained their value throughout the ages. In fact, for many people in Australia, they are seen as the best way to preserve and protect their wealth and pass it on to their coming generation. Investments in the stock market, on the other hand are not seen as long term generational investments since even the most financially sound companies are known to go bust once panic selling sets in and thus turn their shares into worthless paper.
4. Help stave off the effects of deflation
Even though Australia is not going though a deflationary cycle (period of time when prices drop drastically) but such phases in a national economy are seldom predicted with any accuracy. In such a scenario, gold and silver tend to retain their original value.
5. Silver – The Common Man’s Gold
The acquisition of silver is much more attainable for the Australian population as compared to the far more expensive metals such as gold and platinum. In fact Silver is often touted as the “common man’s gold”.
Today, thanks to its widespread use in the solar energy industry as well as other decorative and industrial uses, the price of this metal is predicted to rise steadily unlike the stocks that are traded in the stock market, and that is why it is considered an excellent investment option as compared to many others.