With the recent instability in the stock market and in world affairs, you may be looking for the most stable investment solution you can get. There can certainly be a place for physical precious metals in your net worth as a long term holding, and I have a sizable physical bullion allocation. Some investors use it as a hedge against catastrophic risk, like the collapse of a national economy, or a hedge against inflation risk or currency devaluation.
Since the practical demand for silver is increasing, and the inventory is low, silver investing should be easy. Buy and hold, right? But what should have happened for us silver investors the last few years didn’t happen. That is because there is a supply of silver of which the typical silver investor was not aware. It is not a supply of silver bullion, but of paper silver. And it is huge. There have been massive short positions maintained in the silver market for about two decades. Recently, that short position has been maintained around the $20 strike price. This huge (paper) supply of silver has acted as a price ceiling.
Auto Industry Demand – This is by far the number one influence on the prices of palladium around the world. The auto industry accounts for around three quarters of the global demand for palladium. This is due to the fact that palladium is a key component in the manufacturing of catalytic converters. This, and particularly the demand for vehicles in large markets like the US and China have a huge bearing on the price of palladium.
People have opted to buy into metals for a very simple reason: Metals investing is simply more stable. Stock investments can go belly up, investment banks can close and realty prices can plummet. Meanwhile, while gold and silver do have their ups and downs, the historical tendency has always been for metal prices to rise over time and this is exactly why gold and silver investing is growing in popularity while fewer and fewer companies are offering solid 401K packages.
Since then, other countries have also minted gold bullion coins. Canada made the gold maple leaf gold coin in the year 1979 and Australia followed suit with the Gold Nugget in 1981. These two are in actual fact much more popular than the South African Kruggarand gold coin because of it’s 24 carat purity.