Diversifying Investment Portfolios with Precious Metals in South Africa

The share market has been marked by volatility, prompting investors to diversify to create a balance. Fortunately, Precious Metals offer a reliable hedge. Imagine if you were one of those who spent their entire life savings buying shares in the Silicon Valley Bank. While generally considered a reliable long-term investment, banks are sensitive to recession and fluctuating interest rates. The California-based bank collapsed in March of this year, and you would have been left with nothing but a worthless share certificate.

Attempting to pick a stock that can be guaranteed to grow in value is much like playing the lottery. Financial advisors generally recommend building a more diverse portfolio and dividing your spending between different classes of assets. For example, the suggested mix frequently consists of stocks, cash, and bonds and might even include real estate. However, there has recently been a tendency for market forces to have a more generalised effect on prices, which might seem to defeat the aim of adopting a diverse investment strategy.

In practice, the strategy is sound, but it is apparent that one needs to be more selective about what to include in an investment portfolio. More people are choosing to invest in Precious Metals and here’s why.

Reasons to Include Precious Metals in Your Investment Portfolio

Whether you are looking for a sole investment or something to stabilise your returns from a mix of assets, it’s always a good idea to invest in these commodities for the following reasons:

  • Gold and Silver are tangible assets: Coins and Bullion bars can’t be destroyed in a fire or flood and require no upkeep. You can insure and lock them up securely, or your Bullion dealer might offer a safe custody service. By contrast, a skilled hacker can invade and empty an online share account or max out your credit cards in seconds.
  • The demand for Precious Metals is more consistent: The consumer goods and services market varies constantly, and products can become irrelevant and their manufacturers redundant almost overnight as competitors develop cheaper or more effective alternatives. By contrast, the demand for Gold, in particular, varies far less. Moreover, the forces that impact share prices negatively frequently have the reverse effect on the yellow metal. If a Gold mine becomes unprofitable and ceases operations, its share price will plummet. However, mine closures tend to spark fears of subsequent scarcity, driving the Gold spot price up.
  • A practical option: Trading on the stock market can be a hassle. You would be well advised to deal through a broker, and your transactions could attract broker fees. In practice, buying and selling Precious Metals is a whole lot easier. While you may wish to stick with a particular Bullion dealer, the value of Gold and Silver is recognised by traders everywhere. It’s just as easy to buy or liquidate these assets in Hong Kong or Dubai as it is in Pretoria.

South Africans Trust Mr K when They Invest in Precious Metals

Our Krugerrand coins, minted Gold and cast Silver bars are purchased directly from the Rand Refinery. You can buy them in-store or online and guarantee their quality and authenticity. Why not follow this link and check out our Bullion bars yourself?

DISCLAIMER: The information above was derived from reliable sources and deemed accurate at the time of writing. However, changes following publication may have affected its accuracy. Such changes may occur without notice, and Mr K cannot be held liable for inaccuracies in this article’s content or how a reader may choose to interpret it.