Human beings have been “investing” in precious metals before anyone knew what “investing’’ meant.
Gold, silver and copper are generally considered the most valuable of the precious metals which are traded in American markets. In general, investing in precious metals is seen as a way to hedge your portfolio against inflation, since the value rarely changes, and ownership balances a portfolio. In a tumultuous market, investing in precious metals is a popular way to maintain a safe posture.
On the downside, there is not a large rate of return, and when the market is on a bull run, money invested in precious metals is money that could be more productive invested elsewhere.
As a result, affluent investors are not overwhelmingly involved, but those that are share an enthusiasm for the precious metals market.
In Spectrem’s monthly survey of investors with a net worth over $100,000 (not including primary residence), 17 percent indicated they own precious metals. However, 44 percent of investors under the age of 36 own precious metals, and the percentage drops as the investors get older, to where only 14 percent of World War II investors invest in metals.
Other segmentation of investors shows an interesting trend, however. Among investors who consider themselves to be knowledgeable about investing and finance, 23 percent own precious metals, while those that consider themselves less knowledgeable are less likely to own gold or silver.
So is it gold or silver? Of those who own precious metals, 82 percent own gold, and 55 percent own silver. Eleven percent own platinum, which is more popular among the knowledgeable investors than it is for the less knowledgeable.
The price of gold stood at $869 at the close to 2008, but the tumultuous Great Recession created a newfound interest in precious metals, and the price rose to $1,664 at the end of 2012. By that time, the stock market had recovered from the recession and growth was accelerated, dropping interest in the metals market. At the close of business July 25, 2018, the price on the Commodities Exchange was $1,231.
Fifty-nine percent of those investors who invest in precious metals do so out of personal interest. That makes sense, since the metals no longer carry the value they had centuries ago when they were used for trade. Fifty-two percent of investors say they own precious metals to diversify their portfolio, and 19 percent do so to reduce the risk that exists in their portfolio, because the value of precious metals is less likely to vacillate the way other market products do.
©2018 Spectrem Group