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| − | It’s slightly mad to think that this far into the 21st century, a gold rush could be in the horizon. And yet, after the discovery of close to $15 million worth of gold in Kambalda, the possibility of another gold rush is definitely very real. With the world’s attention fixated mostly on the booming tech sector, Apple and Amazon reached US$1 trillion in market valuation earlier this year, the idea of investing in precious metals might seem antiquated, but this discovery in Australia could certainly put them back into discussion.
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| − | Precious metals, like other mining/drilling products such as crude oil and coal, are precious because of their scarcity. Unlike crude oil and coal however, the use of precious metals don’t always involve depleting them. While there are various industrial applications for precious metals, they are also widely used for decorative purposes, which mean they could theoretically last indefinitely or at least longer than oil. If you’re still limited to looking for shares to buy as investments, it’s time to consider precious metals as an alternative.
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| − | ==An overview on precious metals investments==
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| − | Technically, referring to precious metals as investment is a bit of a misnomer. Unlike traditional investment schemes such as dividend stocks and rental properties which would typically generate return of investments (ROI) after a period of time, precious metals tend to not work that way. Instead, precious metals investment is mostly used as a diversification, to hedge yourself against the more volatile world of equities, real estate, foreign currencies and other fluctuating assets.
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| − | Unlike the listed assets above, whose value is often dictated by the demands of the market, precious metals are tangible assets with an actual intrinsic value. Unlike shares and currency values whose prices go up and down, precious metals are a model for stability by comparison. They might not mean much to investors when the economy is booming, but in a time of crisis, precious metals can be a better friend than your dog. Next, we’ll explore further the three main precious metals in the market, gold, silver and platinum.
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| − | ==Aurum or gold, the chemical element with an atomic number of 79==
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| − | Gold is, well, it’s the gold standard of precious metals basically. It’s nowhere near as rare as platinum but it’s still valuable enough for it to be a primary product, meaning that there are companies out there whose primary business is to explore and extract gold from inside the earth’s crust. Gold is mainly valued for its sheer durability (it’s resistant to both rust and corrosion), its ability to conduct both heat and electricity but we tend to know gold as precious baubles thanks to its malleability.
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| − | While it has some industrial uses, especially in the electronics sector, gold is mostly used for decorative purposes and as foreign exchange reserves by various nations all over the world. As with stocks and currencies, the value of gold itself is constantly tracked by the market. Unlike stocks and currencies though, its value is much more resilient and fluctuates only when there’s a massive influx of buy and/or sell orders.
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| − | ==Argentum or silver, the chemical element with an atomic number of 47==
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| − | Silver is a bit of an amphibian, for a lack of a better word. Unlike gold that is mostly known for its decorative purposes and stability, silver has quite extensive industrial uses as well, which means that prices for silver is much more affected by industrial demands that gold is. Unlike gold, silver isn’t valuable enough to be a primary product and the majority of silver in the world right now is actually a byproduct of other metal production such as copper and lead.
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| − | Silver actually makes for a better conductor than gold, which explains why it’s more commonly used in electronics than the latter. It used to be that silver has a prominent role in the photographic industry in the form of silver halides but the advent of digital photography has made its use pretty much obsolete. These two examples are why silver isn’t as reliable as gold, there’s simply no telling whether silver’s industrial application might change in the future as new technology emerges.
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| − | ==Platinum, the chemical element with an atomic number of 78==
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| − | Thanks to its rarity, platinum tends to fetch a higher price than even gold in the market from time to time. The annual production of platinum usually only covers 10% of gold’s and as such, there are some who refer to platinum as the rich man’s gold, even though it’s been priced fairly closed to gold in recent years. In the US recording industry for example, a record earns gold certification for 500,000 sales compared to the 1,000,000 million that is required for platinum certification.
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| − | Like gold and silver, platinum also have some industrial uses, mainly in the automotive industry as catalytic converters thanks to platinum’s unique chemical characteristics. Catalytic converters are used to mitigate exhaust emission and thanks to stringent regulations in developed countries, demands for platinum have gone up in recent years. As a result, due to more extreme scarcity and industrial demands, platinum also tends to be more volatile than gold.
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| − | The other tricky thing to consider is that platinum production is concentrated on South Africa and Russia, but mostly South Africa. Even individuals with a cursory understanding of the world could tell that that part of the world isn’t the most stable and as such there are always risks of cartel-esque machinations when a commodity is centered on a single, relatively unstable region. Regional upheaval might also play a part in platinum’s prices so extra considerations are necessary when it comes to this precious metal.
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| − | ==Investing on precious metals==
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| − | It should be noted however than actually owning these metals can be somewhat impractical. National governments have the freedom to own coins and bars since they won’t be lacking in space but for individual investors, their options are usually limited to coins, and only in moderate amounts. For Australian investors, Australian Kangaroo coins are available to purchase in gold and silver.
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| − | Other options include investing in precious metals ETF, which would allow you to indirectly own precious metals assets. It’s considerably easier than owning the actual metals but won’t be able to provide as much security in an actual crisis. Still, for the experienced investors, precious metals investment should make up a portion of your portfolio as their level of stability could easily outweigh other assets.
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| − | ==Sources==
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| − | * [https://www.tradinggame.com.au/category/shares-to-buy/ Shares to Buy]
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| − | * [https://www.tradinggame.com.au/5-best-trading-books-2018/ Best Trading Books]
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| − | * [https://www.tradinggame.com.au/about-the-trading-mentor-program/ Mentor Program]
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