Volatility Measure: Investing in Precious Metals 2015

June 16, 2015 4:54 am0 commentsViews: 23

Precious metalshave intrinsic value, plus they have a low correlation with bonds and stocks. Even though the value of the metals themselves can be volatile, there’s a bit of stability in them in that you won’t have to worry about their value plunging thanks to bonds and stocks fluctuations. People continue to invest in the gold market or the silver market for the sake of ensuring that even though there is unpredictability in them, it’s at least more controlled than, say, the foreign exchange market wherein becoming a millionaire and bankrupt within the span of hours is quite possible.

Goldand silver has had plunging prices in 2014, which means that while this is bad news for those who’ve already invested in these metals, at least they’ve become affordable enough for novice or new investors to invest in with the hopes that as the economy gets better, their prices will rise again. These metals are in the territory of the bear market at present. Just recently, silver went down 43% and gold went down to about 27%.

You’re all set when metals have a high market value after buying them during their low-value periods, like the time when gold was worth $1,803 before its drop. Investors are learning the hard way that like the stock market and even the foreign exchange market, there’s more than a little bit of vulnerability and volatility in precious metal investment, and this is apparent even without the recent downslide of prices for these commodities. It’s not unheard of to go through 50% value swings in a single year.

There’s a whole menagerie of reasons why you should invest in precious metals despite their volatility, chief among them the fact that portfolio diversification is a crucial part in ensuring the safeness and security of your invested cash. Their value may go around wildly, but it’s also true that they serve as insurance against political or financial disasters as well as offer one-of-a-kind protection against the dangers of inflation.

These metals are volatile in some aspects, but ultimately much more stable when compared to what people usually remember of when they think “volatile market” (like the forex, for example). Precious metals aren’t like cash wherein you can print more of them if you’re running out. What’s more, investors who are quite savvy are also aware that there are quite a number of metals out there that can be invested on other than the ever-popular gold and silver. You can also invest in these metals in a speculative, aggressive, conservative, and safe manner.

 

 

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