People nowadays have more and more investment options, including recent innovations like Bitcoin and other cryptocurrencies. But one asset class has stood the test of time: precious metals. Here’s why what may seem like an outdated old-school commodity is still very interesting from a young, digital native investor’s point of view.
A short history of gold and silver
The Incas referred to gold and silver as ‘sweat of the sun’ and ‘tears of the moon’. In ancient Greek mythology, gold stood for the glory of immortals. And even historic figures like Sir Isaac Newton believed in the long debunked pseudoscience of ‘Alchemy’, whose goal was to turn base metals into gold. Gold’s history as money dates back to around 550 BC, and government-issued fiat currencies like the US-Dollar used to be directly linked to gold under a monetary system called gold standard. And let’s not forget Academy Award statues, the World Cup trophy or the medals for the first place at the Olympics. All shiny, beautiful, solid gold.
In January 2019 gold buying by central banks hit an half-century high, mainly because countries like Russia are shifting their reserves from the US-Dollar to gold.
Today the world consumption of new gold produced is about 50% in jewellery, 40% investments and 10% in industry. With 440 tonnes per year, China produces the most gold worldwide. In January 2019 gold buying by central banks hit an half-century high, mainly because countries like Russia are shifting their reserves from the US-Dollar to gold.
Silver, on the other hand, is still the second most popular precious metal right behind gold. It’s also used for jewellery, as an investment asset and an industry resource at the same time. Many investors appreciate silver as an investment as it tends to be more volatile because of its compared to gold, lower trading volume.
Inflation-proof investing and portfolio diversification
Analysts have long held that gold acts as a hedge against inflation and protects investors against the volatility and unpredictability of the market. A common rule of thumb is to have 5% to 10% gold exposure in your portfolio.
For younger investors with higher risk tolerances and expectations of higher returns, gold might seem like a conservative investment. But it can complement as well as enhance an investor’s overall portfolio by balancing tech-oriented assets with a commodity that has stood the test of time.
Gold is both a wealth creator and a wealth preserver. As young investors need to keep an eye on the finish line, which is likely decades in the future. Since nowadays people live and work longer, long-term investment strategies that include stabilising asset classes are crucial.
Why digitised gold and silver?
Owning physical gold and silver has always been desirable for many. There is something tangible about it. Its physicality means that you can see it, feel it, weigh it, and admire its beauty. From a golden calf, a golden fleece, and golden crowns to streets paved with gold, the metal has been a fundamental part of our collective human history and its images have even filtered into our language (e.g. ‘as good as gold’, ‘worth its weight in gold’, etc.). In a word, gold is timeless.
Bitpanda Metals offers the best of both worlds: You buy and own digitised physical gold or silver. But you can trade it with the same convenience and user experience as you are used to from other digital assets on our platform.
But owning physical gold or silver has its downsides. You have to visit a gold trader or at least order physical coins or bullions there. Then you have to take care of the security aspect on your own, and store it at home. If someone breaks in and steals it, you need appropriate insurance and also a special safe in order to get it covered. An alternative is to store it in a deposit box at the bank or at a gold trader, which means that you have to go there and pay relatively high fees for it.
Enter Bitpanda Metals. We offer the best of both worlds: You buy and own digitised physical gold or silver. But you can trade it with the same convenience and user experience as you are used to from other digital assets on our platform. We take care of all the security, plus you pay ultra-low storage fees. We are storing the precious metals in Switzerland, in a secure vault and it’s 100 percent insured.