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Precious Metals vs. Rare Strategic Metals - What you Need to Know.
Rare Strategic Metals
Global falling inflation affected gold prices earlier this year, rendering it less valuable than previously and creating a question mark around investing in this precious metal. The expected stimulation by the Federal Reserve’s bond buying program was not forthcoming adding to the decline of investors choosing gold as a sure investment. This has increased the attractiveness of buying rare strategic metals, which unlike gold, have intrinsic value in numerous industrial applications.
Rare Strategic (technical / industrial) Metals
Though these metals are not in fact not exactly rare, being much more common than gold, they are found all across the globe but only in sufficient amounts in certain areas which warrant mining these metals. They are usually found in clusters due to their related properties, which call for expensive extraction processes that generate toxic waste and excessive electrical power. China is the main producer of these rare metals and exporting very little as its demand grows. These elements have increased the value of these metals which will unlikely diminish for some time.
Strategic Rare Metal Usage:
- Production of different types of military and medical equipment.
- Material used in making electrical motor magnets
- Used for computer and television displays (flat panel)
- Material used for power hybrid motor’s rechargeable batteries.
Due to these heavily required products within modern technology, strategic or technological metals make a secure portfolio investment.
Precious Metal Investment v. Rare Metals Investment
- The top investors already possess much of world’s precious metals (like gold) already, which allows very little room for new investors. Whereas rare metals are fairly new in the investing world. Those who begin investing in the early stages have a great chance of seeing the most benefits as the market expands.
- Strategic Rare metals are not sold on the foreign exchange, restricting trade giving investors in these metals an advantage of experiencing less fraudulent exchanges in comparison to the precious metal, gold.
- There is a wider choice of options as there are many different rare metals for trading purposes compared to one within the gold market.
- Though Gold has been a truly great investment over a long period of time, demands are changing. The investors hungry for new markets have a great opportunity in investing in rare metals. These provide investors with added stability and the potential for real financial growth.
Converting to Safer Strategic Metals for your Portfolio
Converting your currency into actual physical metals is a way of securing your financial portfolio, as these metals do not belong to the uncertain realm of others in the current market; they maintain their tangible fixed asset status. National Geographic described these metals as “the secret ingredient in almost anything” as industrial demand continues to surpass production increasing the value of strategic metals and ensuring their cost rises yearly. On investing in these metals, the buyer gains full legal title to the metals.
You can now purchase and stockpile strategic and technical metals in Switzerland or Panama, which was to date only possible for research and industry buyers, expanding and securing your financial wealth while the future of precious metals remain uncertain.
Why Are We Suddenly Hearing More and More People Talk about Returning to the Gold Standard?
In 2011, the Bachmann, Gingrich et al ‘Gold Standard Tour’ bought public attention to the pressing need for a solid anti-inflationary measure that would both stabilize the economy and prevent the accumulation of further debt. The same year, the House of the State of Utah approved the use of gold and silver coins as a valid alternative currency to the fiat printed notes of the Federal Reserve. As they did so, Tennessee, Iowa, Minnesota, South Carolina and Georgia were all waiting for approval for the same measure from their respective governments. As debt rises, the value of gold always returns to center stage.
According to commentators like David Stockman, it was Nixon, on the back of Roosevelt and the 1913 Federal Reserve act, that delivered the final, severing blow to the gold standard in 1971. The speculative economy, which was designed to foster sound investments and facilitate maximum returns on tangible but abstract products, has been the bedrock of 40 years of financial bubbles, the catalyst for massive debt creation and currency manipulation and the cause of an era of global trade imbalance. Many now argue, after the spectacular failure of the Federal Reserve to protect against - and whose poor regulation and bad inflation rate decisions are largely responsible for - the 2008 financial crisis, that hard money, the gold standard, is the only way to protect against financial uncertainties and irregularities and secure the interests of those who have the means and power to stimulate the economy.
Forbes has been one of the most outspoken advocates of the gold standard. In the 40 years between the end of the American Civil War and the creation of the Federal Reserve, when the gold standard really held sway, industrial production in America grew by 682 per cent, notes Forbes writer Nathan Lewis. Conversely, 100 years exactly after the creation of the Federal Reserve, the government is shut-down because it can’t agree on a budget, the US is currently estimated to be $16,754,217,317,943.28 in debt, and we’re expected to hit the debt ceiling by the 17th of October this year. Arguments in favor of a system based on the value of gold, when heard with these figures under consideration, are timely. It doesn’t take a Wall Street genius to work out we’re on precarious ground. Despite ‘The Fed’ having mirrored a gold standard system for decades, and despite debate traditionally including discussion of the role of ‘The Fed’ in a gold standard system, even Greenspan is considering ditching the institution altogether.
It’s not only Forbes and Greenspan who are occupying the gold standard soap box. Beck, Bachmann, Paul, Gingrich and many others have been appalled by the governments policy of lurching awkwardly towards financial collapse, while its principle measures for protecting against such a crisis, most notably the Federal Reserve, are actually responsible for the dire of state of play we find ourselves in. We need to find a way of creating a stable economy, one that won’t be prone to over-inflation, and these are two of the key characteristics of the gold standard.
The fiat money of the Federal Reserve is a death sentence for anyone trading in an economy on the cusp of hyperinflation, and discussions of the gold standard have once more come to the fore as industry leaders, CEO’s and business owners look for a way to protect their investments. The value of gold rises and falls like anything else, but does so in line with the market and not with the wishes of politicians or the speculations of Wall Street financiers.
Precious Metals vs The Stock Market - Why Anyone Telling You Stocks are Better is Flat out Wrong
The last decade has been an incredible era for those who invested in precious metals. While stocks took a collective dive in 2008 and took the better part of a decade to recover, the valuation of gold and other precious metals went nowhere but up and are still well over the value that they held at the beginning of the crisis. However, with the stock market once again rising - to the level that it was at before the housing bubble burst - there are many that say it may be a great time to take profit on your precious metal investments and invest those profits in stocks and bonds. Whether or not to take this advice may depend upon your individual financial situation, but there are many reasons to keep your portfolio stocked with a strong position in precious metals.
Be Mindful of History
Those that are suggesting a return to a portfolio filled with stocks and bonds are not paying attention to recent history. If you look at the case of General Motors, for example, they point to its recovery as a success story. Even the President of the United states bragged about how well GM was doing during his campaign for reelection. I even heard one person say that he wished he they had bought GM when it was in distress, hovering around a dollar a share, because since it is now valued at $34 a share he would have “made out.” He was aghast when it was explained to him that the GM Stock that exists today is brand new, created as an IPO after the government takeover of GM. The millions of investors in GM, both the common stock and many of the bondholders, got absolutely nothing from the bankruptcy reorganization. The common stock was renamed and sent to the pink sheets to die, whereas even the bondholders who were legally entitled to repayment got pennies on the dollar if they got anything at all. This is a risk to investors in any corporation, especially one that is considered too big to fail.
What Do You Value?
When you are buying stocks you are not buying shares of the value of a company, but only its equity. If the company in question takes too much debt and no longer has equity, your stock becomes worthless. Although bonds were looked at as a much safer alternative, they only have value if the government chooses to enforce repayment. By contrast, precious metals are an investment in something real, with definable value. Gold did not increase in value because people were buying too much of it out of fear, but because large companies buy it to create real products. Every iPhone and iPad has a little bit of gold in it, and jewelers will always prize it. There has never been a time in human civilization when gold did not have a high value, as rising supply has always been paced by rising demand.
Go For The Gold
There is a reason why the Federal Reserve still stocks about 160 Billion dollars of gold at Fort Knox several decades after the US went off the gold standard. The government realizes the timeless value of gold, and no matter how great an investment of stocks and bonds may look on paper they will always be an investment with an enormous risk profile. The government, banks, large corporations and big unions will always be able to find a bailout for themselves, for the common investor there is no protection from economic downturns more effective than investing in the security of precious metals.
Are you looking for an investment with all of the positive advantages of precious metals but less manipulation, higher industrial demand and better stability, check out rare strategic metals.
Why Precious Metals Make Ideal Alternative Investments
A precious metal is by definition two things - rare and valuable. Gold, silver and platinum group metals are highly prized at the moment because of industrial demand and the influx of investors eager to hedge with precious metals. The fact that gold, platinum, silver and palladium all have an International Standards Organization currency code, namely ISO 4217, indicates that these precious metals are viewed by the international banking industry as unrivaled hedges against economic uncertainty.
Platinum Group Metals
Although the platinum group of precious metals encompasses rhodium, palladium, osmium and iridium, the most heavily traded precious metal in the platinum group is platinum itself. Platinum and palladium are especially in demand right now because each has a number of industrial applications, including uses in medicine, dentistry and catalytic convertors.
Nonetheless, platinum is revered among investors because of its rarity, beauty, value and resilience. Platinum is actually a noble metal, which means platinum is relatively impervious to corrosion, aging and oxidation damage.
Platinum bullion is tracked daily by Monex Precious Metals. According to Monex, because fifty percent of the world’s platinum is used in industry, the supply and demand differentials are seen as optimal for investors looking to diversify assets. On a more technical note, platinum bullion finished on July 5th, 2013 at $1328, which is nearly double its 5-year nadir.
Usually platinum is purchased in 10-ounce bars of .9995 purity; investors typically purchase platinum to indemnify themselves against tempestuous economies, exchange rates, inflation and other market uncertainties.
Store of Value
Precious metals can be employed as hedges or stores of value. Commodities like silver and gold are frequently used to sidestep taxes or economic uncertainty and as a means of safely parking money. Investors are attracted to precious metals as a reliable store of value because commodities like gold, silver and platinum rarely take a significant downturn in value due to market demand, the needs of private collectors and industrial applications.
Using precious metals as a store of value is a means of risk management. Risk management here simply denotes the weighing and prioritization of financial risks and efforts made to minimize economic risk. Precious metals are such an effective hedge and risk management strategy because there is a constant market demand and therefore inherent stability with these assets.
Even though precious metals may not always be capital assets, the fact that precious metals’ values are guaranteed not to evaporate overnight makes gold, silver and platinum stable hedges against regional economic downturns and, truthfully, the whims of federal reserves around the world.
Comparing Precious Metals
According to Human Events, gold has shown slightly more volatility than other precious metals in recent years and therefore might not be as reliable a hedge commodity as silver or platinum. Indeed, according to Monex, gold has swung from a high of approximately $1800 to a trough of approximately $1200; the latter figure refers to gold’s July 5th closing rate.
Although gold probably will not dip below $1000, right now gold is more of a dicey market for aficionados than time-tested hedge against inflation.
Some economists actually argue that promising stocks are a reliable short-herm hedge against inflation whereas precious metals like silver are ideal as long-term hedges due to relative stability and inherent market demand.
In some ways investing in precious metals may be the patriotic thing to do as many of the Founding Fathers found the notion of a central bank like the Federal Reserve repugnant and the gold standard a sure indemnification against runaway inflation. The whims of smaller yet interconnected markets underline the importance of locating a secure hedge against uncertainty.
Why In these Turbulent Times, Rare Earth Metals Can be More Precious than Gold
Rare Strategic Metals
Gold prices took a major tumble in the middle of April 2013. The main reason cited by many experts was the fall in inflation around the world. Falling inflation means that gold is no longer the valuable hedge it was previously and investors are wondering why they need it. The fall was an unpleasant surprise for many gold investors who had expected the rise in value to continue. Many pointed to the Federal Reserve’s bond buying program which was expected to provide stimulation to the economy and thus improve the value of gold. Things do not look positive for gold as the price fall is just one more point on a long list of reasons to sell. At the same time, the list of reasons to buy rare earth metals continues to grow. Unlike gold, which has no intrinsic value, these metals are actually useful in a number of industrial applications.
Why Rare Earth Metals Are Rare
The term “rare” here is a little misleading. The rarest ones are still hundreds of times more common than gold. These metals are found all over the world, but only in a few places have they been found in sufficient supply to make mining worth it. These metals are usually found clumped together due to their similar properties. The clumps also contain radioactive minerals like uranium. This clumping tendency means that the metals must be extracted via difficult and expensive processes. Extraction uses a lot of electrical energy also produces toxic radioactive waste. China is presently the main producer of rare earth metals, partly due to the fact that it has a relaxed attitude to environmental pollution. China is also the main user of these metals and is exporting less to the outside world while retaining most of what it produces as its demand grows. These factors make rare earth elements more costly and the need is not likely to go down any time soon.
How Rare Earth Metals Are Used
These are the elements on which modern technology runs. Examples of how they are used include:
- In making magnets for electrical motors
- For the rechargeable batteries that power hybrid vehicles
- In flat panel displays for computers and televisions
- To make various types of medical and military equipment.
The importance of these metals for technological innovation is why they could make a good addition to your portfolio.
Investing in Rare Earth Metals Versus Investing in Gold
While trading in precious metals like gold is almost as ancient as civilization itself, trading in rare earth metals is fairly new. Much of the world’s gold has already been exploited and is in the hands of the top investors, with very little to be gained by newcomers at the bottom. With these metals (as with many other types of commodities) those who get in on the ground floor are likely to see the most benefit as the market grows. Another benefit of trading in these metals is the fact that they are not sold on exchanges, so trade is restricted. The restriction lowers your likelihood encountering fraud when compared to gold. You will get options simply due to the fact that there are many different rare earth metals to trade, compared to just one on the gold market.
While gold has proven itself over time, demands do change. Those investors who want to be players in a newer market now have the opportunity. Rare earth metals present the stability and potential for growth that you should be seeking from your investments.
How Much Silver is Left in the World
As an investor in today’s economy the emphasis needs to be placed on preserving the wealth you’ve already earned. The stock market, while hitting recent all time highs is being driven more by FED monetary policy than actual profits, inflation is already in the pipeline due to the increase in the M1 and M2 money supply, and bond yields are being kept artificially low to stimulate the economy.
Many smart investors have turned to precious metals as a way to hedge against future inflation, and economic uncertainty. Precious metals also offer an excellent opportunity for long-term growth. Physical possession of metals is a smart investment in which a position can be built slowly and privately over time, away from prying eyes. Silver is highly liquid, easily portable and its value is recognized worldwide.
Since the bull market in precious metals began in 2000 the price of gold has risen over 575% from a price of $272.00 per ounce to a recent price of over $1600.00. While gold was posting these incredible gains, silver’s prices quietly outperformed gold’s in percentage terms with an unbelievable 600+% rise to a recent high of $29.00 per ounce. In fact, of the entire commodities group, silver has been the top performer in percentage terms since 2000.
Silver’s Price Drivers
Silver (along with platinum) holds a relatively unique position among the precious metals in terms of demand. In addition to being a strong store of value and a hedge against inflation, silver has strong demand as an industrial metal. It is used in green technology and nanotechnology. It also has anti-bacterial qualities that make it valuable for medical use. Silver also has strong demand as jewelry and for decorative use in the home. When you invest in silver, you are investing in a metal that has a built in demand on many levels.
When silver is used in certain industrial applications, it is in essence permanently removed from the supply chain. As industrial use increases, supplies are dwindling. Mine production rose a modest 1.4% in 2011 to 761.6 metric ounces. These gains were largely due to by-product production from gold and lead/zinc mining. While supplies in 2011 stood at 761.6 Moz, fabrication demand was robust at 876.6 Moz. The estimated supply of above ground reserves of silver currently available for delivery stands at around 600 million ounces. While new mines are beginning to come online, it can take years to produce meaningful amounts of the metal for fabrication.
The Silver Supply/Demand Imbalance
This supply/demand imbalance has begun to show up in the investor market. Recently the U.S. mint had to suspend production of Silver Eagles due to a lack of available blanks for minting. In 2011 the supply/demand imbalance was over 100 million ounces. As industrial silver use increases, this deficit may continue to expand. With current silver available for delivery at 600 million ounces, this represents 6-years of deficit supply coverage. It should also be noted that these worldwide production figures include Government sales and “scrap” which may account for as much as 25% of the total worldwide production numbers. If this figure were removed, worldwide demand would exceed supply by approximately 37%.
Invest in Silver
As demand continues to exceed supply, investors may see a rise in the premium over spot price for investment grade silver bullion. The time to invest in silver is now.
Swiss Metal Assets is selling silver with some of the lowest premiums in the industry. Check it out here.
