Investing in Metals: Do you really want to take home the gold?

Every Olympian dreams of winning a gold medal. But when it comes to investing, which metals do you want in your portfolio?

We took a look at the performance of gold, silver and copper in the last year, and what factors influence the demand for each. Here’s what we learned.

Gold: GC1:COM 


Screen Shot 2016-08-11 at 12.36.07 PM *

 Gold is having a good year, but with rate hikes reportedly on the way, experts don’t think it will last. Economic data is expected to improve in the third quarter, leaving the already rich-level commodity little room to climb.

Unsurprisingly, gold holds its strongest value in times of fear and uncertainty.  Although we’ve long since moved away from the gold standard, many still hold the conviction that preserving wealth in gold is safer than putting money in the bank.

Apart from its status as a hard asset and its use in jewelry, gold is used in computers and some electronics. It’s expensive to mine, and experts predict that the global demand will outweigh the available resources within 45 years.

There is much debate on whether gold is a good investment. For those concerned with preserving wealth, gold coins and jewelry are a better choice than buying shares.

Silver: SI1:COM 

Screen Shot 2016-08-11 at 12.40.23 PM *

Silver typically tracks the price of gold, so it’s no surprise the runner-up metal is coming back after five disappointing years.

How sustainable is this uptrend? From 2003 to 2011, the price of the metal increased 1,000%, but silver has a history of surprising forecasters with price swings. Prices today are still relatively depressed – less than half of 2011, making now a good time to buy, in any case.

Like gold, silver is used for hedging currency risk, but it serves a stronger role in the commodities market as an industrial medal, used for electronics, circuits and switches.

Copper: HG1:COM 

Screen Shot 2016-08-11 at 12.41.17 PM *

Analysts often say copper can be used a barometer for emerging markets. Remember when China was having a bad year? So was copper.

Although the commodity has seen its share of ups and downs in late 2015 to 2016, growth in China’s real estate sector sent the metal on a steady incline last month. Copper also posted its largest rally in two weeks yesterday, and is currently on the ascent.

Copper is heavily dependent on sales from the housing market, because it is often used in wiring, piping, heating and cooling. In fact, 30% of the global copper demand comes from construction.

The long term outlook is that copper will always be in high demand, with producers struggling to increase supplies. For this reason, investors sought the opportunity following Brexit to get in at a low price. It’s going to be a while, however, until the world economy rebounds enough to significantly boost share prices.

Hey, a medal is a medal.

Whether or not you decide to incorporate these commodities in your portfolio, the bottom line is, metals are nonrenewable resources in high demand. They will always have value, if only for their use as jewelry – and, well, medals. Which brings us to another question: how much is a gold medal worth, exactly?




Related Posts

Read More

This Is Why Software Implementations Fail

For institutional investors, implementing new software, just like moving to a new house, can be overwhelming....
Read More