Three Good Reasons to Own Precious Metals Now
Investment experts have long-recommend portfolio diversification and that 10% to 20% (and sometimes more) of an investor's assets be devoted to tangible assets such as gold, silver and platinum bullion and bullion coins. That's prudent asset diversification strategy at any time. But in today's uncertain political and economic environment, there are many (and very sound) reasons to consider investing in precious metals now. Here are three:
Precious metals have been a solid hedge against a declining U.S. dollar
The value of the U.S. Dollar declined more than 30% from 2001 through 2004, plunging 5% in just a few weeks. For a long list of reasons, including massive increases in U.S. government deficits totaling trillions of dollars, the cost of a prolonged war against terrorism and a massive trade imbalance, this trend may be just the beginning. This means U.S. Dollars could now be worth less and less every day. Which also means that investments pegged to the U.S. Dollar could be worth less and less every day. Gold, silver and platinum, though, are held and traded throughout the world...and their true value (that is, their purchasing power) is not solely or directly dependent on the falling fortunes of the U.S. Dollar. Precious metals, therefore, can be a form of protection against a falling U.S. Dollar. As demonstrated during 2003 and 2004, as the value of the U.S. Dollar declined, gold and silver prices and the value of precious metals expressed in dollars increased.
Precious metals have been a proven safe-haven in times of war, political strife and uncertainty
Today's financial markets are increasingly at risk from terrorism, political instability and war. As we saw so after the 9/11 tragedy, financial markets can be closed down, and remain closed down, for extended periods of time. As terrorism incidents continue to increase around the world, it is not unreasonable to expect further (and potentially more severe) disruptions in financial markets, banking and commerce in the future. Whenever and wherever tension or hostilities break out, people everywhere quite naturally gravitate toward the assets they trust most. And today, even in our high-tech-driven 21st century, the asset class millions rely on in times of trouble is gold and silver. Precious metals have always been, and likely will continue to be, a valued form of "wealth insurance" in good times and bad.
Precious metals can offer outstanding price appreciation and profit potential
After reaching a high in late 2007, the stock market "bubble" burst in 2008 and wiped out trillions of dollars of investor equity. The major stock indices have since failed to return to their previous highs. Gold and silver prices, on the other hand, have increased dramatically—more than doubled, in fact—during that same time period. Which means precious metals can produce impressive investment returns even when (and sometimes, especially when) returns from stock, bond and other paper investments decline in value or evaporate completely. The Monex Atlas Account, a way to purchase precious metals using up to 4-to-1 investment leverage, can be a powerful short-term trading vehicle during periods of rapidly changing precious metals prices. And many financial experts have predicted and continue to forecast rising gold, silver, platinum and palladium prices in the months and years ahead.
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