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Investing in Precious Metals
Many investment advisors recommend precious metals as part of a properly diversified portfolio to provide capital appreciation, liquidity, and a hedge against conventional paper assets. Because precious metals are counter-cyclical to paper assets, a diversification into gold, silver, and platinum can therefore reduce the total risk of your overall portfolio and preserve your wealth. History supports the premise that investment in precious metals is the best protection against uncertainties in the future.
Because the characteristics of gold, silver, and platinum differ substantially, and because each of the metals reacts differently to economic and world events…we recommend building a position in all three of the metals.
At AmeriGold we can help evaluate your personal investment goals, and recommend the most suitable precious metals investments to maximize profit and minimize risk.
Below, is a profile on each metal, describing its individual characteristics, properties, and uses.
GOLD
Ever since early times gold has been one of man´s most prized possessions. Monarchs waged war in hope of plundering treasures of gold from their conquered rivals. Kings and princes sent expeditions of the earth in search of new sources of gold; and thousands of people have joined the "gold rush" to any place on each that held either an actual or rumored prospect for finding gold.
From any of the great civilizations of the past, man has treasured gold as a medium of exchange and a store of value in both good times and bad.
What we learn from history is that gold maintains its purchasing power over the long-term and serves as an excellent portfolio diversifier by providing a hedge against the erosion of paper assets such as stocks, bonds, and currency.
Gold is unique, in that it is the only asset that is not simultaneously someone else´s liability. It is not directly influenced by economic (monetary and fiscal) policies of any individual country. Gold is extremely liquid and is universally accepted as a means of payment. Because of these characteristics, gold had long been held by the world´s Central Banks, as the "ultimate asset." In fact 25% of all known above ground inventories of gold are held by the Central Banks of the World.
Gold is scarce-so scarce that all the gold ever mined would fit into a cube measuring just 20 yards on each side. New supply is growing by less than 2% annually. Competing for this limited supply are jewelry manufacturers, industrial and medical users, national governments (central banks) and private investors.
From an investor standpoint, both ancient and modern history proves the importance of holding gold in one´s portfolio. When you realize that all of the world´s currencies are now fiat currencies (money that has no intrinsic value, and is not backed by anything tangible like gold) you quickly begin to understand the need to own gold.
This anonymous quote sums it up best.
"Distrust of 'fiat´ paper money cannot be prevented by even the most powerful dictator. The more a government abuses its money-credit system and impairs the buying power of its currency through inflation, the greater will be the demand for 'hard money´ (gold), the value of which cannot be altered by the whims of politicians or the money managers."
Since 1971 when the United States went off the gold standard, our currency, the dollar, had been a fiat currency. As George Bernard Shaw said, "You have to choose as a voter between trusting to the natural stability of gold and the natural stability and intelligence of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold."
Please go to our PRODUCTS page for recommendations on BUYING GOLD
SILVER
Silver has been the most widely used monetary metal for day to day use by ordinary citizens in the history of the world. It has endured centuries of economic and political crisis, yet has always emerged as a universally accepted currency and store of value. While gold has been used for government-to-government transactions, it has been silver that the people have used to buy their bread.
Although silver is relatively scarce, it is the most plentiful and least expensive of the precious metals. Today, the demands of modern technology have revealed the remarkable rage of electrical, mechanical, optical, and medicinal properties that have placed silver as the key metal in many applications. Out of all the metals in existence silver is unsurpassed in its ability to conduct heat and electricity.
The major industrial applications of silver are:
- Photography
- Jewelry/Silverware
- Medicine and Dental
- Electronics
- Water Purification Computers
- Telecommunications
Silver is sometimes referred to as "poor man´s gold," but during the last major Bull Run of precious metals in 1979-1980, silver far-outperformed Gold rising to its all-time high of $50.36 per ounce. In 1978 silver was $6.32 per ounce.
Today, silver is once again a low priced commodity with tremendous upside potential. With current demand outpacing new supply, and the lowest inventory levels in years, the pressure is building for a new bull market in silver.
For investors, the greatest endorsement for putting silver in your precious metals portfolio came when billionaire Warren Buffet announced he had purchased 130 million ounces of silver (20% of the world´s silver market). This announcement shows that even the biggest player on Wall Street are beginning to recognize the potential that has now developed in silver. Going forward, silver looks to be a great source of capital appreciation. At AmeriGold, we highly recommend building a position in silver.
Please go to our PRODUCTS page for recommendations on BUYING SILVER
PLATINUM
Investors have generally focused on gold and silver when seeking to diversity their investment portfolios. However, there are several reasons to consider adding platinum to the mix of precious metals in one´s portfolio to enhance performance even further. The two main factors that investors can look to for platinum price appreciation are:
1. Platinum´s Scarcity - World platinum output is less than 1/15th that of gold. Only Produced each year. It takes roughly 10 tons of raw ore being mined to produce
Just one pure ounce of platinum. The two countries that produce nearly 90% of the world´s platinum, South Africa and Russia are very unstable politically and economically. Any disruption from one of these two primary sources of supply would be a catalyst to propel the prices of platinum much higher. Unlike gold and silver, there are no significant overhangs or large stockpile of platinum to meet demand, if a serious supply situation were to occur. The platinum market has been in supply deficit for two years running, and a similar situation is anticipated through the year 2000. So if "precious" is measured in terms of scarcity, platinum is the most precious of them all.
2. Platinum´s Growing Demand - Platinum demand has grown an average of over 5% per year throughout the 1990´s. Of the five million ounces of platinum that are used each year, the two main usage groups are jewelry fabrication (40%) and catalytic converters (36%) used in automobiles.
The many other industrial uses of platinum are best summed up by Nina Lipton, Director of Market Research for the Platinum Guild International: "You may not realize it, but platinum is literally all around you! Over 20% of all consumer goods either contain platinum or are produced using platinum. Eyeglasses, pacemakers, unleaded gasoline, polyesters, colored paints, jet fuel, many pharmaceuticals, lasers, plastics, fine jewelry pieces, explosives, endoscopes, light and oxygen sensors, fuel cells, some anti-cancer drugs, pollution control devices for autos and industry, even the fiber optic-based information super highway, and countless other goods all rely on platinum."
In addition, platinum - utilizing fuel cell vehicles, which are expected to become commercially available in the year 2005 from Daimler Chrysler and Ford, will provide a whole new sector of growth for the white metal.
Because of its remarkable properties (resistance to corrosion, 3215 degree melting point, electric conductivity, and high durability), industry is constantly finding new uses for platinum that should insure demand long into the future.
Talking all of this into account, investment in this metal looks extremely bright, as we move into technology-based future. The platinum market is much smaller than either gold or silver, and platinum price moves tend to outpace those of its counterparts. The last great precious metals bull market of 1979-1980 saw platinum soar to $1,085 per ounce while gold peaked at $875 per ounce. With strong demand for platinum and the ever-present threat of a supply disruption, the fundamentals are extremely supportive of higher prices. We recommend taking a position in platinum, along with gold and silver to maximize the return of your precious metals portfolio.
Please go to our PRODUCTS page for recommendations of BUYING PLATINUM