What makes precious metals so “precious”?
Precious metals are called so for a reason. The yearly production of these is quite limited. Their scarcity - is what breeds their value and uniqueness.
There are three major highly valuable metals that you can trade with - platinum, gold, and silver.
Precious metals have been serving mankind in various shapes and forms (money (coins), investment tools, industrial commodities) all over the global marketplace for ages.
Why would anyone invest in precious metals while having a paper money system? - you might ask.
Well, if we refer to history we can track that fiat currency has actually failed in many different countries and cultures, while silver, gold, and other metals managed to stay globally valuable commodities through the centuries.
During times of political or economic inconstancy, it is prevalent to see a sudden increase in demand. The wobbling of bonds, stocks, funds, and real estate can also push people toward giving their preferences to precious metals. If securities can be threatened, metals are staying a valuable asset that people can keep in their possession.
Precious metals have low to negative correlations to other asset types such as bonds and stocks. Meaning, that even if the smallest percentage of metals is included in an investor’s portfolio, it will lead to a reduction of both risk and volatility.
Nowadays, most financial advisors will recommend their clients diversify their portfolios to help to minimize risk. And here is where precious metals are used. They have proved to be a safe haven for investors while staying more or less stable for the past decades that were full of economic uncertainty. Metals can also serve as a hedge against inflation, as you can’t create more than is already available, they can’t be inflated.
And of course, precious metals are known as an exemplary stand-alone type of investment with a great capital potential that is based on modern demand and supply.
These metals can truly be called a global currency that offers investors a unique tool of a tangible asset with exceptional liquidity, which is so important in today’s market.
Role of silver in the global market
Silver is included in the list of the most traded precious metals as it has the advantage of countering inflation and protecting against other economic and financial crises.
Despite being a byproduct of other metals, silver attracts investment demand for the longest time. It is well known for its unlimited usage possibilities in all spheres. Apart from being used in medicine, and jewelry, It's noted to be highly required in the industrial production of solar panels, phones, computers, microwaves, and other kinds of electronic devices. Sometimes, silver is even used in nuclear energy! New ways to utilize silver are created almost every day.
Therefore it plays an important role in both commodity and financial investment assets.
Investors buy physical silver in form of coins or billions. The majority of it is mostly purchased in Germany, U.S., and Canada. There is also a high demand for silver in emerging markets, though they prefer it in jewelry, and religious and cultural ornaments, which can be easily melted down, reshaped and resold.
Silver bullion and coin investments are a great and efficient way to hedge against inflation and any other financial market shifts.