Inflation is one dreadful topic everyone wishes to avoid but finds themselves deliberating from time to time.  As with other economic indicators, inflation marks an increase in price which coincides with currency devaluation.

For governments, investors and customers, this is no good news.   While government agencies scramble to reduce the adverse effect of inflation on its economy, investors are always on the lookout for the best investment option to hedge their assets against volatility. Like most investors who rely on commodities such as precious metals with historical positive track records against inflation, you should also consider adding some precious metals like Gold, Silver, Platinum, and Palladium to your investment portfolio.

 PRECIOUS METALS AND INFLATION HEDGING 

Over the years, precious metals such as Gold and silver have acted as safe havens for inflation hedging.  During the great inflation of the 1970s, annual inflation rates were as high as 8.8 percent with gold investors raking in a 35% return on their gold investment. In general, precious metals were tremendously successful between 1970 and 1980 with about 3900% return on investment.

Fast Forward to the present day and the annual inflation rate is decades high at 8.5%  (as of March 2022).  A quick look at Precious metal pricing would see the gold price at historically high levels amidst the inflation. This could be yet another opportunity to hedge against inflation. Depending on your investment budget, you can hedge against inflation by buying 1 gram Istanbul Gold Refinery Gold Bar (w Assay)  for as low as $109.32, or  1 oz 2022 Little John Gold Coin The Royal Mint for as low as $2,674.13.

WHY PRECIOUS METALS?

Why are precious metals considered a “great” investment option during inflation?

Although they are valuable for inflation hedging, other factors also contribute to their popularity among investors. Some of these factors are highlighted below.

DURABILITY

Precious metals have been around for a long time, even before fiat currencies, shekels, and the recent cryptocurrencies. When you think about it, these metals were among the earliest forms of exchange, and are proof of durability as a commodity with higher chances of outlasting other currency mediums.

 DIVERSIFYING YOUR PORTFOLIO

Another reason to rev up on your precious metal investment is diversification. For one, Gold and silver are known to move in opposite directions to stocks and equities. Investing in precious metals would give you a “balanced diversification” of funds across your portfolio to prevent losses that could wipe your portfolio in its entirety.

Take Russia for example, their diversity in gold helped its economy bear the brunt of fallouts due to the economic sanctions against them in response to their “military exercise” in Ukraine.  Juan Carlos Artigas, director for investment research at the World Gold Council, summed it up perfectly by saying “One of the most important attributes that gold has is that it helps investors manage risk more effectively,”

INTRINSIC VALUE

Gold, Silver, Platinum, and Palladium all hold intrinsic values in themselves. The most valuable, Gold, is used in crafting pieces of jewelry, ornaments, dental implants, award plaques, glass making, etc. Gold can also be used in treating medical conditions like rheumatoid arthritis. Other precious metals have their usefulness like silver for jewelry, batteries, and X-rays;  platinum in producing fiber optics, computer hard disks catalytic converters, and defibrillators; and Palladium in dental health care. As an investor, precious metals help diversify your portfolio from stocks, bonds, equities, etc. long-term performance.

FLEXIBILITY IN INVESTMENTS

Precious metals make accommodations for flexible investments. You can decide to invest by buying these metals directly, in future contracts, or through exchange-traded funds (ETF) and mutual Funds with ownership in precious metals. Another option is investing in gold/silver mining companies.

OBSTACLES TO INVESTING IN PRECIOUS METALS

Obstacles are an integral part of investing and precious metals are no exception. If you are looking to invest in gold or other precious metals, then some obstacles to expect include

• An increased Capital gain tax of 28% capital when sold;
• Volatility in non-gold metals such as silver, platinum, and palladium;
• Miscellaneous costs accrued through shipping, insurance, and storage;
• Lack of passive income; and
•  Overall maintenance.

Understanding these obstacles would maximize your chances of making a well-informed decision when investing in precious metals.

At TRB BULLION, we are seasoned professionals, readily available to help our esteemed customers with their precious metal needs. Our product categories contain several precious metals you can choose from to boost your portfolio with investment.

If you need additional information on investing in precious metals, Contact us today!