If prices for precious metals such as gold spike, investors who have recently purchased physical assets may jump on the chance to sell them and make a quick profit.
Gold’s steady performance record over time, though, is one of its distinguishing features, according to Gainesville Coins precious metals specialist Everett Millman.
Research from the World Gold Council indicates that — due in part to gold’s scale, varied sources of demand and overall liquidity — the precious metal showed less volatility than a number of equity indexes, alternative investments, and commodities in the 20-year period between 2002 and 2022.
Many investors, according to a Bureau of Labor Statistics report, continue to use gold as a diversification tool to help hedge against the effect of the economic challenges that global conflicts and inflation might have on their portfolios.
Investors, Millman says, may benefit from approaching precious metal investments as a long-term opportunity.
“We tend to take a conservative view that precious metals are there to protect your wealth,” Millman says. “Sure, there is near-term volatility, as with any asset, but gold’s calling card [is] that prices have tended to maintain their level of purchasing power relative to other assets.”
Silver’s Key Selling Points
Silver, too, has a strong value record. The precious metal’s price, when adjusted for inflation, has increased approximately 50% since 1915 — suggesting it can outperform inflation, according to U.S. News & World Report.
In recent years, the interest in silver has been considerable. The precious metal serves as a critical component in a growing number of processes and products; its varied utilizations — ranging from printed circuit boards to solar photovoltaic power production — have contributed to the current strain on the available supply of the asset.
In 2022, the silver market experienced its largest-ever deficit, according to the Silver Institute. The nonprofit organization predicts another sizable supply shortage will occur this year.
Gainesville Coins’ Millman says investors may notice an impact.
“With the industrial uses, so much silver gets consumed and used up each year that there is relatively less available for investment purposes,” he says. “Periodically, there have been backlogs and difficulties procuring supply of silver, at least in the volumes that people are demanding it.”
Safeguarding Wealth With Precious Metals
In addition to the ongoing demand and the price histories of silver and gold, the feeling of security that physical precious metal assets can offer has also likely fueled interest in items such as coins and bars.
Unlike other investment options that may pose a risk of loss due to circumstances that are out of investors’ control — such as a pension plan that could potentially collapse, for example — physical precious metal assets are tangible, enduring investments. That aspect of purchasing gold and silver resonates with some investors, according to Millman.
“Precious metals are like a savings account,” he says. “They’re a great way of storing your wealth in a safe form; you can pass it on to your children or grandchildren. The peace of mind of ‘This is something that’s always going to hold its value’ is an important thing to keep in mind.”