Commodities / Gold & Silver 2020
Dec 14 2020 – 17:04 GMT
Precious metals are the foundation of the financial world. They have permanent value and are the oldest form of currency in the world. If you don’t own physical gold and silver, your investment portfolio lacks a solid foundation. Precious metals are often sought after as a permanent store of value and as a method of portfolio diversification.
While cash, bonds, stocks and real estate offer investors financial diversification, precious metals underpin all other assets, especially during times of economic turmoil and market turmoil.
Imagine an inverted pyramid containing successive layers of asset classes.
This is what the late John Exter envisioned when he devised a model for classifying assets based on their level of risk and financial strength. The US economist and central banker has placed risk-free gold at the top of the inverted pyramid, under Federal Reserve liquidity, US Treasuries, notes and bonds, AAA-rated corporate bonds, paper currencies, certificates of deposit (CDs), bank deposits, commercial paper, government and municipal bonds, junk bonds, Eurodollar market segments, third world debt, insolvent borrowers and savings.
A monetary researcher and visionary, Exter understood how the scarcity and reliability of gold made it fundamental in a volatile financial world. He knew gold would last amid rising debt and an unlimited supply of paper currency, which he called “IOU Nothings”.
Exter’s original gold-based pyramid is a simple yet timeless way of visualizing a very heavy financial infrastructure, which is today burdened with $ 1 trillion in unregulated derivatives, $ 270 trillion in global debt. into a snowball and trillions more in unfunded liabilities. In an over-leveraged and over-leveraged world, gold is the keystone, supporting all other assets with higher risk and loss potential.
Consider these examples:
- Cash deposits and government bonds lose value in the face of inflation in an environment of low or negative interest rates.
- Corporate and municipal bonds can become worthless when companies go bankrupt and cities default due to excessive debt.
- Stocks can fall during stock market crashes and become worthless.
- Even real estate investments can lose value when financial bubbles burst and real estate markets collapse.
All investments fluctuate with economic tides. The less stable drift like quicksand. Some wither and perish in the arid financial desert. Physical precious metals endure through the ages. They resist market chaos and financial storms. They retain value. Physical bullion will never become worthless. This is why gold, silver and platinum are essential in a balanced and diversified portfolio.
Not all precious metals investments are created equal; however, some are riskier than others, especially paper-based products.
Trading precious metals contracts, such as futures and options, on commodity exchanges is the most speculative, as is owning shares of start-up mining companies that explore for gold and gold deposits. ‘money. Closed-end funds and exchange-traded funds (ETFs) that track bullion prices offer the potential for growth and income, just like established gold and silver producers, but they also carry risks depending on management decisions, counterparty risks and general market conditions. These investments compromise the most important characteristic of bullion: liquidity. They are as liquid as the number of shares traded daily. In comparison, the physical bullion markets have a turnover of around $ 60 billion / day.
Unallocated or pooled bullion accounts offer more security and less risk, but not to the same degree as outright ownership of precious metals, and also carry counterparty risk. Bullion in these accounts can be leased by the custodian.
With the lowest risk and the greatest liquidity, physical gold, silver, and platinum are your best and safest option. Tangible precious metals provide permanence in an ever-changing world, protect and preserve wealth, and act as a financial safety net during times of turmoil and turmoil. For small quantities, a home safe will do for storage, but for larger operations it is safer to have a reputable custodian who will hold your bullion on an allocated basis.
Open-ended mutual fund trusts that hold physical bullion on an allocated basis are a good choice for registered accounts like RRSPs, IRAs, and Keough plans, as they buy and sell bullion in and from the markets. bullion – liquidity is the same as bullion with no counterparty risk.
Any storm-resistant structure has a solid foundation. Each stable bridge has a solid buttress. Every balanced and robust financial portfolio is bolstered by rare and rock-solid precious metals.
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By Nick Barisheff
Nick Barisheff is the Founder, President and CEO of Bullion Management Group Inc., a company dedicated to providing investors with a secure, profitable and transparent way to buy and hold physical bullion. BMG is an associate member of the London Bullion Market Association (LBMA).
Widely recognized as an international bullion expert, Nick has written extensively on bullion and current market trends which have been published on various news and business websites. Nick has appeared on BNN, CBC, CNBC and Sun Media, and has been interviewed for countless articles by leading trade publications in North America, Europe and Asia. His first book, $ 10,000 Gold: Why Gold’s Inevitable Rise is the Investors Safe Haven, was published in Spring 2013. Every investor who seeks the safety of sound money will benefit from Nick’s knowledge of the preservative power of the gold portfolio. . www.bmgbullion.com
Â© 2020 Copyright Nick Barisheff – All rights reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and does not constitute investment advice. The above information and analysis is taken from sources and uses methods believed to be reliable, but we cannot accept responsibility for any losses you may suffer as a result of this analysis. Individuals should consult their personal financial advisers.
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