Savvy Investors And The Precious Metals Outlook

Savvy Investors And The Precious Metals Outlook 5.00/5 (100.00%) 6 votes

After all of the economic commotion that took place starting in 2007, many investors are ready to find something that will provide long-term stability. They’ve seen the harm irresponsible national fiscal policies can cause. They’ve seem the turmoil that ineffective management at our financial institutions leads to.

Some, lacking a true understanding of how the global economy works, fear that there will never be a full recovery. Of course, this is a rather foolish postulation. The world will continue as it always has, even if the most dominant economies have changed. This is why savvy investors are paying attention to the precious metals outlook.

What the Global Economy Has to Do with the Precious Metals Outlook

All precious metals are traded on an international level. There is demand for gold in the United States, China, India, Brazil, and Mexico. When someone invests in gold, they aren’t relying on any single economy’s ability to grow their wealth. They’re relying on the economy of the world.

Precious metals can’t be created. They can only be mined. This means that the limited supply we have today is unlikely to change drastically at any time in the near future. Because of this, the values of gold and silver remain relatively stable from year to year. They do fluctuate based on market demand and inflation, of course, but this almost always results in positive gains.

The Future Value of Gold

While no one can truly predict the future value of any investment, there is some evidence indicating that gold will experience a significant increase in value in the near future. The global economy is still unstable, and it is during times of economic uncertainty that investors flock to gold. Future recessions, depressions, and even speculation can cause a wave of investments, bolstering the precious metals outlook.

The Future Value of Silver

Silver is often overlooked in discussions of the precious metals outlook, but it is the second most popular precious metal. The outlook is particularly strong, due to the current disparity in the ratio of the values of silver and gold. Historically, silver is worth one-fifteenth the value of gold. Because of recent surges of gold investments, however, it is current only worth one-fifty-fifth. Experts predict that the market will balance out in the near future, leading to silver nearly quadrupling in value.

The Future Precious Metals Outlook of Platinum and Palladium

Platinum and palladium are the third and fourth most popular precious metals, but they are almost entirely overlooked by investors. Unlike gold and silver, there is a serious industrial demand for both, especially thanks to emerging economies. They’re important components in catalytic converters, which are required for nearly all modern automobiles. As auto manufacturers ramp up their production around the world, they’ll need even more of each.

It may not be possible for the supply to meet the demand, however, as platinum and palladium mines have been experiencing reduced production. The Russian stockpile of palladium has been helping to meet current demands, but many experts speculate that it will only continue to do so until 2015. If the Russian stockpile of palladium is depleted, then the shortage will cause the value of both metals to skyrocket, and those who are already heavily invested in both will experience significant gains.

Regardless of which precious metals investors choose to focus on, one thing remains clear: they’re solid, long-term investments that can lead to serious gains, but almost always serve as a hedge against inflation. No true economic expert would recommend investors only hold positions in precious metals, but instead, encourage them to use them as an intelligent, virtually fail-proof means of diversification.