According to many investors and advisers, metals belong to the investment portfolio because they represent an imaginary port in times of uncertainty. However, it depends on when you buy the metal and which you prefer.
There are more precious metals, but recently there has been talk mainly of gold, silver and platinum or palladium. You can buy them in the form of bricks (rather lower “plates” in lower weights) or as coins, which also carry artistic value. Although precious metals have similar physical properties at first glance, they differ quite a bit in economic use. Therefore, it is necessary to think about what risk you want to bear as an investor.
Times of certainty and uncertainty
Gold has been among the precious metals prim for millennia. It’s valuable. AND as currency is recognized worldwide. “Gold is unique from the whole group of precious metals. About 90 percent of the gold mined will be sold for investment or jewelry purposes, only 10 percent will be used industrially. “ recalls Pavel Ryska, an analyst at J&T Bank.
The situation is different for other metals. About half of the mined silver is processed into jewelry, coins or investment bricks. Half then goes to industrial enterprises. AT platinum and palladium then predominate in industrial use. These metals are used, for example, in the production of catalysts in automobiles.
The price development of gold, silver or platinum is different – it depends on the nature of the metal and its use. “Platinum and palladium thrive in times of certainty, because they are most dependent on demand from automotive manufacturers. Platinum is not a monetary metal and, in the event of a crisis, will rather decline along with declining demand from production. “ points out investment advisor Michal Nedbal.
Zdroj: Shutterstock
Hunger for gold
For example, gold is a metal that is hungry for in times of crisis because it serves as security and safety. Its price rose in the past financial crisis and during the ensuing economic recession. Gold has seen a similar development in the context of the coronavirus pandemic. On the last day of July this year, the price of gold exceeded the limit $ 1,980 per troy ounce. Since the beginning of this year, the price of gold has risen by about 30 percent.
„Gold is thriving due to fears of inflation and record low interest ratesthat central banks are globally prescribing as a treatment for the coronavirus pandemic in an effort to boost the economy. Significantly increased interest in alternative assets in response to the events of recent months is thus known. The inflow of liquidity is recorded in all assets, including precious metals, “ Patrik Hudec from Generali Investments comments on the situation. According to Hudec, investors are also noticing growing geopolitical tensions, which also affect the price of gold.
Disappearing gold
It was interesting to see how gold disappeared from the markets at the beginning of the coronavirus crisis. For example, the Czech Mint, which sells both coins and bricks of precious metals, had some products sold out. Whoever could and had finances tried to secure their portfolio. Once again, it was proven that price of gold benefit from uncertainty in the economy.
The question then is whether to still invest in gold, even though its price has risen sharply in recent months. “In my opinion, the current situation is mounting investment in gold. It is not just the global economic recession that is taking place. Central banks have responded to this situation with a massive increase in the volume of money in the economies, which poses a risk of currency devaluation. That’s why gold is a relatively proven insurance policy. “ believes Pavel Ryska.
Other silver and platinum
In addition to gold, there are two other interesting metals – silver and platinum. Silver also rose in price. It recently broke the value of $ 20 an ounce, which is the highest value since last September. “Silver, like gold, is rising in price in times of crisis and times of uncertainty. At the same time, it is an industrial commodity that is growing along with corporate demand. For the same amount of money, you buy a larger volume of silver, which of course increases the storage requirements. “ says Michal Nedbal.
The price increase was also recorded by platinum. Its price jumped last fall, when it exceeded $ 1,000 an ounce. At the beginning of the year, the ounce was trading at around $ 880.5. With the onset of the coronavirus crisis, it fell to $ 600 an ounce and began to grow again in April. In mid-summer, it sold for $ 909.5 an ounce.
Silver and platinum thus gained their reputation. „The prices of platinum and partly silver are significantly dependent on industrial demand, therefore, they depend on the state of the economy and are cyclical. By buying them, the investor is partly betting on economic prosperity. They also respond to how the metal is used in different industrial sectors, “ concludes Pavel Ryska.
Also read: How did the pandemic affect investment wines and spirits?
–
