Precious (monetary) metals
Precious metals are so named because they are rare and thus have a high economic value. Precious metals provide a means for investors to store wealth and seek value growth. The most common types of precious metals that people invest in are gold, silver, and platinum. Other precious metals are iridium, osmium, palladium, rhodium, and ruthenium.
Precious metals such as gold and silver have long been used to store and exchange value. They also have been used to either mint governmental currencies or to back the value of a government’s currency. Today, precious metals, which form part of the commodities asset class, are mainly used as a means for investors to diversify their portfolio beyond stocks, bonds, cash, and other holdings, partly because they don’t track the movements of stock or bond markets [Nolan].
Gold is the most high-profile precious metal, consistently generating attention from the financial media and market participants. Until 1973, the U.S. currency system was based on the gold standard. Several factors account for an increased desire to hoard the shiny yellow metal:
-Systemic financial concerns: When banks and money are perceived as unstable and political stability is questionable, gold has often been sought out as a safe store of value.
-Inflation: When accurate rates of return in the equity, bond, or real estate markets are harmful or are perceived to drop in the future, people regularly flock to gold as an asset[Fernando, Scott].
Nolan, P. (2022). Precious metals. The Balance. Retrieved from: https://www.thebalancemoney.com/what-are-precious-metals-5214371
Fernando, J., Scott, G. (2022). Precious metals: Definition, how to invest, and example. Investopedia. Retrieved from: https://www.investopedia.com/terms/p/preciousmetal.asp