Precious Metals

As Michael Sanibel wrote in this excerpt from Forbes Magazine “Gold has been the universal symbol of wealth for civilizations throughout the ages. Ancient cultures created gold jewelry and early forms of money were crafted from gold. Though thousands of years have passed, the fascination with gold remains as strong as ever. Investing in gold and other precious metals has been attracting a lot of attention lately. You've probably heard the ads proclaiming "gold has never been worth zero." The metal has, according to the ads, retained intrinsic value regardless of economic conditions. The gold bugs would have you believe that at some point in the future, your money won't be worth the paper it's printed on. Based on what has happened to the world economies over the past couple of years, their argument is gaining credibility and popularity in many investment circles. Types of Metals Gold is a popular metal and attracts most of the press, but it isn't the only metal out there to invest in. The three other major investment metals are platinum, palladium and silver. All have risen in price over the past several years as demand has increased around the globe. While many people associate precious metals with jewelry and coins, these metals are also used in industry. The emergence of China and India as significant players in world commerce has contributed to the higher demand for industrial purposes. Gold is a critical element in the electronics industry as an integral part of many high technology components. It's an excellent electrical conductor, corrosion-resistant, chemically stable and a superior heat shield. Platinum is found in medical equipment, computers and automotive parts. Softer than platinum, palladium is a key element in catalytic converters due to its ability to withstand oxidation and high temperatures. It is highly conductive and is sometimes used instead of gold in electronics. Palladium has a variety of other applications including raw material processing, photo processing, water purification, fuel cells, and the refining and purification of oil and natural gas. Why Buy Precious Metals? The U. S. government has taken dramatic action to combat a very severe recession. The results so far have been mixed, but the effect on the national debt is obvious. The Federal Reserve has been rapidly inflating the money supply, but at some point the record low interest rates will have to increase to stave off retail inflation. How successful this strategy will be, and how it will affect future economic growth, are open questions. Concern for future inflation is one factor pushing commodity prices higher. Holding metals is a way of spreading portfolio risk during times of economic upheaval and war, and when inflation threatens currency values. To many people in this uncertain environment, buying metals represents a safe-haven approach to diversification and a partial hedge against equities.”