Precious Metals Questions: The Usual Fluctuation Or Too Much Uncertainty?

Precious metals are typically considered to be one of the more secure types of investments. In fact, their overall stability is one reason they’re favored by preppers and …

Gold bar and coins

Precious metals are typically considered to be one of the more secure types of investments. In fact, their overall stability is one reason they’re favored by preppers and others who subscribe to a more apocalyptic worldview. Recently, however, there’s been some anxiety about investing in precious metals because, during the pandemic, we saw an overall decline in economic stability. Does that mean there’s too much fluctuation in precious metal cost to make them a safe investment?

It’s All About Timelines

In order to decide whether or not this is a good time to invest in precious metals, one of the most important factors to consider is how long you intend to hold on to your purchase. Most people choosing to buy gold or silver are working on a long timeline, so while precious metal prices may fall with economic recovery, this is typically a temporary trend. It happened during the 2007-2008 recession, too, but as long as you’re planning to hold your investment over multiple years, you likely won’t feel the decrease.

Wealth Security Concerns Are Fading

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Demand for gold, including gold-backed ETFs, >reached new highs during 2020 Q3, when economic anxiety was near its peak. This pattern demonstrated that people were still using gold in the same way that they always have – as a way of protecting more traditional wealth when other investments are too risky. Those buyers, however, are the ones who aren’t interested in long-term gold holdings; as soon as the market stabilizes, they’ll sell off their gold and resume investing in stocks, even if that means taking a slight loss. Their wealth is sizeable enough that doing so is a minor sacrifice.

For those who are more concerned with gold as a retirement strategy or other long-term financial tool, however, the question is about >whether the big selloff has already ended. Experts largely believe that this is the case and that these metals have likely bottomed out, or will within days. That means those who are deeply invested in gold and silver can expect a return to normal conditions.

Alternative Options Remain

Even in the midst of economic lows, silver and gold typically show very little variation relative to their normal price. They shift, yes, but with the overall assurance that they’ll return to baseline. On the other hand, if you’re looking for an alternative commodities option, one that has more earning power, rather than one that offers simple security, you might consider investing in iridium.

When looked at in the context of the commodities market, as well as Bitcoin, iridium is the strongest performer, with a 131% price increase between just January and March of 2021. Despite its strong earnings potential, however, it’s important to note that iridium is also hugely volatile because it’s almost exclusively used in industrial settings and overall supply is quite small. As a result, a slight shift in demand or production can be a windfall or a disaster.

When investing in precious metals, it’s important to have a clear sense of what your goals are, how long you intend to hold your investments, and how much you can afford to risk. While these are vital questions for any investment, they play a distinct role in precious metal investments and deserve more careful consideration as a result.

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