For the past few years now, professional economists and investors have been clamoring on about the value of owning precious metals as part of one’s investment portfolio. This has become a trend that many companies such as Regal Assets have been cashing in on. It’s not surprising given that gold and silver have been so recognized throughout human history as commodities of value.
Now it should come as no surprise that between those two popular precious metals, gold is by far the most commonly purchased in general. Now there are two ways to buy gold. The first is to buy physical coins, bars and bullion and have them stored either in a home safe or at a federal depository (the latter being the safest method). However, a more overlooked way of buying gold is through stocks of companies that are involved in either the gold selling process or the gold extraction process.
What sets the price of gold?
The price of gold is determined by an unbelievably complex set of variables that pretty much only the foremost precious metals investing experts fully understand. However, just like most commodities and stocks, the biggest influence of the price of gold is of course, the complex relationship between its supply and the demand for this rare precious metal. Given that stocks are traded pretty much all day every day, it should come as no surprise that its price can vary at any time during the day or at any time during the night. Also, the amount of people that purchase gold at any one time can either increase or decrease the price of gold quite drastically in a very short period of time.
But it’s not just supply and demand
There are also other factors that can have a strong impact on the value of precious metals. For one, when supply is mentioned, most people immediately think about individuals buying up the commodity in question. However, bigger factors can influence the price per ounce of any precious metal and change its price accordingly. For example, silver is actually a component that is used in may electronic devices such as computers and mobile phones. Considering that, if a specific segment of the technological market begins to increase in activity, it can affect the activity in a seemingly unrelated market, like gold or silver. Other factors that can affect the trading of precious metals are politics, the ups and downs of the financial sector and wars. Of course, there are many more but that gives a good idea of the diversity and complexity of how the prices of precious metals are set.
Besides gold, what are other popular precious metals?
The other most popular rare metal is of course silver. It is ubiquitous in not only pop culture and throughout history, but as we mentioned previously, it is abundantly in demand in the industrial sector for many industries.
Then there is platinum. While significantly less popular than both gold and silver, it is still a valuable asset to hold. However, most of the supply of this precious metal comes from either South Africa or Russia, two countries that often see their share of political and economic turmoil and as such, are a bit less trusted than say gold of silver.
Not just for jewellery
So there you have it. An overview of how precious metals are traded and how their prices are set. Despite the downsides that comes with investing in precious metals, there is no doubt that they are some of the most stable commodities that a person can be trading in. In fact, there is no point in human history where humans have not attributed any value to gold. It is possibly the safest of investments.