Hedge Your Assets Against Inflation with Metals to Invest in
Cautious investors prefer to invest in safe assets, such as precious metals. Such investments insure them against serious losses. More active investors often trade metals to hedge their more volatile assets. But is it possible to make a big profit from investing in metals? Hedge Your Assets Against Inflation with Metals to Invest in.
Which Precious Metals Are Most Often Invested in
- Gold: This is the most popular asset for investments among metals as evidenced by the presence of gold and foreign exchange reserves, which are supported in most states.
- Platinum: This is a rare precious metal, but it is actively used in the automotive industry and in the manufacture of jewelry. The more rapidly the industry develops, the higher the demand for it. Therefore, during periods of economic recovery, it is very profitable to invest in platinum.
- Silver: The high demand for silver is determined not only by its use in jewelry but also by its active applicability in industry. Silver is used for the production of batteries, including solar, electrical engineering, and much more.
- Palladium: It is by far the most expensive of the precious metals. Despite its high cost, it is very much in demand in industrial production.
There are other precious metals that you can invest in, such as rhodium, osmium, iridium, and ruthenium. They are invested less often, but the demand for them is growing more and more thanks to their unique qualities used in the industry.
What Determines the Price of Precious Metals
Although these assets may seem less volatile compared to others, their price also experiences certain fluctuations and is determined by:
- Demand: when a new way of using a precious metal in production is discovered, the demand for it grows, and hence, prices too.
- New deposits: when large deposits are discovered, their price drops.
- Fluctuations in world currencies: when the dollar weakens, the price of precious metals rises, and vice versa.
Study metal price charts to analyze the market dynamics of this asset before deciding which financial instrument for your investments to prefer.
Different Forms of Investing in Precious Metals
You don’t have to buy gold bars or anything else to make a profit from investing in metals. Moreover, when buying bars of precious metals, you are faced with the problem of their proper safe storage. There are other forms that will allow you to profit from fluctuations in the price of metals without accompanying storage issues:
- Shares of precious metal mining companies: in this case, you will have lower commissions than when buying bullion. And when there is an increase in the price of the metal you have chosen, the value of the shares will increase more than the cost of the purchased metal ingots.
- Certain derivatives, such as CFDs and EFTs, are the most common derivatives for investing in metals since they require a small initial investment and allow you to use high leverage.
The rise in the price of precious metals is especially characteristic of unstable times. Fleeing from economic shocks or political instability, a large number are turning to buying these assets. As a result, the price rises sharply. Therefore, if you have made your investments in metals in advance, during this period, you can make a significant profit. Hedge Your Assets Against Inflation with Metals to Invest in.
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Disclosure: This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting.