Those who watch the financial & commodity markets over the last few weeks probably feel as though they have been on something of a rollercoaster ride.
Only a month back, Gold bulls were out in force as the metal looked as though it would go beyond $1875, but this was not to be.
Nervous markets reacted negatively to the re-appointment of US Fed Chair Jerome Powell and saw his continuation in the job as a sign that tapering would pick-up steam and possibly even run alongside the long-anticipated interest rate increases in the new year.
All of this coincided with worrying inflation data from both the US and elsewhere which left investors in Precious Metals somewhat side-lined. With the recent discovery of Omicron, the festive season this year is therefore fraught with concerns.
Aside from metals, equities have been extremely volatile reflecting the concerns of more lockdowns as Europe and the US face an uncertain winter while combatting the pandemic and the new variant. Bitcoin too has seen its price slump in recent days once again highlighting just how volatile that investment vehicle can be.
While Gold and Silver have been unable to sustain their better levels of a few weeks back, there remains important positives to their accumulation.
Of course, fears of an extended period of high inflation should underpin the Gold price going forward. And, with equity prices still at historically high levels (despite their recent volatility), analysts continue to point to having an exposure to Precious Metals as a hedge against market instability.
It comes as no surprise therefore that savvy investors are repositioning some of their equity-based assets in physical Gold. Indeed, the hard asset of bars and coins are seen as a further diversification away from stock or ETF-based investments.
Christmas is also an opportunity for individuals – and those with a longer-term investment horizon – to choose a Precious Metal product as a gift that keeps on giving. Given the softer prices this month, there is a window of opportunity to diversify away from traditional Christmas gifts towards coins and metals, and in so doing, provide loved ones with more than just another present – an asset that will appreciate over time.
2022 provides ample indicators which could be good for Precious Metals. Aside from the inflation fears – now regarded by the US authorities as less ‘temporary’, there are major global issues that can propel Gold forward.
Global tensions go well beyond the uncertainties of Covid. There remain fears of heightened tension between China and the USA over the future of Taiwan. Russian troops have been massing on the Ukrainian border threatening another incursion. Geo-political uncertainty can play havoc with financial markets, and it is wise to reduce risk by having exposure to metals. A drive by the US to improve its infrastructure can also drive demand for commodities.
All combined, there are very solid reasons to own Gold and Silver either as a personal investment option or as a gift to family and loved ones. Using this asset class widely in uncertain times has historically always paid dividends.
While short-term price fluctuations often distract, investors need to position their assets – and those potentially of their children – into safe and rewarding alternatives.
Both Gold and Silver therefore provide the necessary investment characteristics to provide long-term asset protection and security for family members.
