The five advantages of holding physical precious metals are:
-they can be a hedge against inflation and economic downturns;
-they provide diversification for investors with portfolios that have large allocations to stocks and bonds;
-because they cannot be created from anything, the supply is limited, which means demand will always exist;
-physical gold offers an easy way to take delivery of your investment because it is a physical asset just like stocks or bonds; and finally,
-you may want to hold physical gold in case there is a financial crisis.
Physical precious metals
Physical precious metals are assets that are not correlated to other investments, making them a great addition to your portfolio. They have many advantages over holding stocks or bonds and can even be used as currency in some countries around the world.
Advantage #01: Portfolio Protection
Many people invest in precious metals because it is considered a “safe haven” investment that usually performs well during times of crisis. This helps protect against stock market crashes which often lead to severe declines in global markets.
Holding precious physical metals also protects you from inflation, increasing prices on goods and services since their natural price tends to remain constant even when currencies lose value. You will gain more purchasing power with physical gold than if you held cash or bank accounts, for example (cautionary note).
Advantage #02: Protection from Inflation
Precious metals tend to retain their value or increase as currencies lose purchasing power. So when the U.S. dollar fails its value, you would need more dollars to buy an ounce of gold, for example, than you needed last (cautionary note).
Advantage #03: Portfolio Diversification
Holding precious metals can help diversify your portfolio and protect against any future economic downturns that may occur in your country’s markets. For this reason, many investors choose to hold some physical precious metal for added protection even if they already own stocks and bonds because it provides extra security when other investments are performing poorly (cautionary note).
Advantage #04: Store of Value
All precious metals costs do not just cost on the markets. Many of them have industrial purposes and can be used for this purpose, which raises their value when demand increases (cautionary note).
Advantage #05: Liquidity
Liquidity is one of the most significant benefits when it comes to precious metals since they are easy to store, transfer and liquidate. You can easily take physical gold or silver off your hands for cash if needed and can serve as a currency in some countries around the world.
The Bottom Line
The advantages of holding precious physical metals are many. They should be considered by anyone who is looking to diversify their investment portfolio since they can protect against stock market crashes, inflation increases, economic downturns, etc.