For the past two years, the Pandemic has brought the world to its knees but not in precious metals like gold and silver. Inflation, huge national debt, and negative-yielding bonds have caused gold and silver to increase in value.
Remember that gold has an inverse relationship with inflation. This means that gold will keep its purchasing power or value even when the cost of living increases.
Gold and silver have been symbols of wealth since the beginning of civilization. They are precious metals that have become popular in the past decade for their good returns compared to other investments such as Bitcoin or Stocks.
Nowadays, many investors buy precious metals as protection from either an economic crisis or rising inflation and maintain their wealth. It is what they believe is a safe haven investment. In fact, you can tell how healthy the economy is from the price of gold.
Is it the perfect time to invest in Gold and Silver now?
Gold has the most industrial demand than any other metal in the World. Gold is used in many industries like electronics, medical, and a lot more in making jewelry. On the other hand, silver is also used in making electronic appliances, jewelry, solar panels, and more. Although silver has much greater volatility than gold, it is still perceived as a hedge against rising inflation.
Last 2019, gold and silver prices began to increase as economic growth slowed down. The Pandemic played a major role that made the gold price hit a record high of around $2,060 per ounce in August and silver at around $30 per ounce.
There are many reasons for you to invest in Gold and Silver now and one of the reasons is because COVID-19 is still present. It is true that the global economy is slowly recovering but according to World Bank, despite the recovery, global output will be about 2% below pre-pandemic projections by the end of this year. Many emerging markets and developing economies still continue to struggle with the COVID-19 pandemic and its aftermath.
The world economy is still fragile, which means this could be a good time to buy gold as its prices will continue to rise. They may even hit a new record-high price this year.
The current price of gold as of September is around $1,750 per ounce while silver is around $22 per ounce.
The Pros of Investing in Gold and Silver
1. Gold and Silver are safe havens against Dollar
As of 2021, the United States owes China alone $1.1 trillion, which is only a portion of the total national debt. The dollar’s value is determined by the fact that the United States has vowed to repay its debts. We’ve learned throughout history that the only way to avert a financial crisis is to be prepared. Precious metals are that safe-havens. Gold and silver will always hold their value no matter what happens, even if the country it comes from has collapsed. Gold is also a great investment because gold can be used to hedge against inflation since it will keep its value in most cases of financial instability.
2. Gold and silver are tangible investments
Investing in tangible assets can minimize your overall market risk, in a way that most intangible assets can’t. Precious metals also have a very high intrinsic value.
3. Helps diversify your portfolio
Gold and silver will help you avoid putting all of your eggs in one basket by providing you with a cross-investment that can protect against inflation, crashes, or even a recession. Precious metals are considered to be the best form of natural protection against market fluctuation.
4. Different opportunities
There’s a lot of ways to invest in gold and silver and make them grow. You can have it as a tangible investment like bullion coins and bullion bars. You can sell it or pass it on to the next generation. If you don’t like to own a physical one and invest conveniently, you can go for Gold ETFs or Gold ETNs which is the most common way to invest in Gold. Another one is to buy precious metals as an IRA which is an “Individual retirement account”. It provides tax benefits along with the safety of your investment.
5. Low Risk
Unlike other commodities, they don’t need feeding, fertilizer, or maintenance. Gold, for instance, doesn’t rust or rot. They are indestructible by fire and water, and they don’t deteriorate over time.
The Downsides of Investing in Gold and Silver
If you want to invest in precious metals, you’ll need a safe place to store them. Storing them at home is not safe since they are valuable and you could be robbed. Another thing attached to storing them is paying an extra fee.
Precious metals might not be immediately liquid. In some cases, precious metals like gold and silver aren’t recognized as legal tender for many countries. You first have to convert it into the currency of your country. It also requires some time to be converted into cash.
However, with an online storage account, you can sell your gold or silver in an instant, just like a stock.
Most precious metals in physical form are taxed as collectibles. In the U.S., this means that you pay a 28% tax rate on capital gains.
Where to Buy Precious Metals?
You can buy gold and silver bullion online. Gold and silver are just like any other commodity that you can buy or sell over the internet. They are physical assets that you can buy easily online. Make sure to buy only from a reputable dealer.
Online Auction Sites
In an online auction, there are sellers and bidders. You will compete against live auctioneers as well as other online bidders. You can also buy precious metals on online auction sites like Heritage Auctions, eBay, and Spink.
Local Coin Shops
Buying in local coin shops is also a good thing. Many investors also like local coin shops because they can see the products, which assists in facilitating purchasing decisions.
Commodity Exchange Traded Funds (ETFs)
Another option is ETFs. ETFs are not physical gold or silver themselves but documentation that indicates ownership of them. These are also called paper metals. Just like the stock market, ETFs can be bought or sold at any time throughout the trading day, letting investors take advantage of intraday price fluctuations.