5 Reasons Why You Should Invest in Precious Metals. How does it contribute? -Written by Ishita Pal (Managing News Partner) Bisjhintus News

“Gold is money, everything else is credit” as stated by JP Morgan in his testimony in the year 1912. Yet in contrast to this we have also heard “Gold is like a pet rock” and also “Gold doesn’t have any yield.” Now the question arising out of this conflict is “Should we invest in gold and other precious metals or not ?”. Well, it will be completely absurd to jump onto a conclusion right at the beginning. Thus, let's reflect on all the pros of including precious metals in your investment portfolio and then determine if it is a wise decision or not!

 

 1. Diversification of your Portfolio:

Investors are warned never to put all their eggs in one basket, thus providing the opportunity for a diversified portfolio. Gold and other precious metals being the safe-heaven assets provide a suitable counterbalance to alleviate losses and risk during geopolitical uncertainties and inflation. No matter how greater return the equity investments offer, it also bears a higher volatility and greater downside risk. Whereas Gold and other precious metals have been proven to be a more stable investment in times of market downturns.

 

2. Not an abstract commodity:

Gold and other precious metals being a physical commodity has been proven easily accessible as an investment. It soothes the investor’s mind for their assets can be easily accessed in times of turmoil or financial distress. The multiple avenues through which investors can access the gold market are through sovereign gold bonds, gold ETFs or gold mutual funds.

 

3. Resilience to Inflation:

Throughout history, the globe has gone through severe periods of inflation when the power of currency has been demolished yet gold and other precious metals have been proven a reliable source of stability, income and value during those times of distress. Subramanian, the co-founder of Up Stox stated “This characteristic makes Gold an essential component of any diversified investment portfolio, offering stability amid economic uncertainties.”

 

4. Safe Heaven during the recent Geo-Political Developments:

Across the globe, the geo-political developments have been proven to be quite tense to the trade and economic growth. Such times call for “safe-heaven investments”. Besides the Israel-Mossad and the Russia-Ukraine standoff, there have also been disputes in the Middle East and The Chinese Intervention in the South China Sea. Apart from this, the drastic change of leader across several countries all-together is also set to impact the trade bonds across the globe.

 

5. A sigh of relief during the pandemic time:

The pandemic time was proven to be a distress for all the investors be it for the short term, long term or medium term. The stock market went through a huge time of uncertainty making it a significant casualty for several investors. In such times the gold and precious metals have been proven as the most reliable source of investment.

 

To conclude, gold and other precious metals have always been a reliable investment and will also remain so in the future because of easy accessibility and stability. The complex dynamics and the age-old “supply-demand” fundamentals have the authority to influence their prices which also further makes it a leverage for the investors to benefit from the price appreciation and capitalize on market trends.