Precious metals, especially gold, have been a traditional safe haven asset to protect themselves from times of uncertainty and inflation like the current one. However, their prices can suffer intense fluctuations. In the case of gold, for example, they soared with the outbreak of the pandemic and the start of the war in Ukraine, but then plummeted again between March and October of last year gold ira company. For all these reasons, many savers wonder if investing in precise metals is a good strategy for their money to revalue.
For the investor who wants to obtain short-term profitability – within a year -, “we do not recommend this type of investment,” comments Víctor Alvargonzález, independent advisor and founder of NextepFinance. The reason is the behavior of its price in recent years, since currently the price per ounce is trading 11% below the maximum reached at the beginning of August 2020, of $2,067.
Evolution of the gold price 2020-2023
With inflation and war in the background, some analysts suggested that new highs would be reached this year, but so far this has not been the case. Although the price began to climb in November and the ounce of gold reached $1,900 in January , the trend reversed the following month. “Gold is not an asset to speculate on, but rather a more strategic investment,” comments Javier Molina, market analyst at eToro. And he clarifies that betting on this precious metal “generates a certain diversification in the portfolio”, since the evolution of its price is usually different from that of other assets. Thus, while the main stock indices suffered losses last year, the price of the precious metal ended practically at the same level as at the end of 2021.
The analyst recommends this type of investment for periods of losses in variable income, and as long as it represents only a small percentage of the portfolio. A similar recommendation is offered by Alvargonzález, who considers that this investment is indicated above all for long-term investors with diversified assets. In these cases, he points out, “it is good to have a percentage in gold, which would be around 5% of the portfolio.” “And when it goes down a lot, buy,” he adds. Historically, those who have bet on the precious metal as a safe haven asset have obtained attractive returns. Specifically, in the last five years its price has risen 36%.
However, for a type of investor who aims to obtain returns in the short term, he recommends making savings profitable through the acquisition of bonds and treasury bills , such as North American ones, “which are giving a 5% return and is the safest asset in the world,” he says. In the case of the three-year Spanish bond, the yield will be lower, 3.25%, although much more attractive than what most deposits still offer.
On the other hand, Molina warns that there are many differences between the main precious investment metals. In the case of silver, for example, its price is “closely linked” to global economic activity because it is used more in industry, due to its greater usability in the production of electronic devices and other products such as vehicles and solar panels. Therefore, its volatility is greater than that of gold. “If there is a recession, it tends to suffer more,” the analyst points out. At the moment, for example, it is in full correction, with a price value of $20 per ounce, about 25% less than the highs at the beginning of 2021.
Three ways to invest in precious metals
In addition to gold and silver, there are other attractive precious metals from an investment point of view, such as platinum and palladium . And there are two great ways to start investing in them. The first is through the physical purchase of coins and bars, which can be purchased in fractions. “A small investor can do this by purchasing reasonably affordable products,” details Raquel Herrero, operations analyst at Coininvest. For example, buying a one-gram bar costs about 65 euros.
There is also the possibility of making money profitable through investment firms that invest in mines and obtain benefits from the extraction or purchase of the metal at low prices. An option, adds Herrero, “more volatile and intangible” than in the first case.