Precious-metals have been the best performing asset-class in the last 10 years –making incredible gains in comparison with the returns of the FTSE 100. Some economists have described their explosive upward-trend as a “financial bubble”, where mass-speculation has over-inflated their price, leaving them susceptible to a sudden crash. However, I believe that anyone who thinks that the gold and silver bull-run (upward trend) is over, should seriously reconsider as the ‘fundamentals’ providing their decade-long momentum have rapidly intensified in recent years and show no signs of fading.
So, what is so special about gold and silver as an investment, and what are the ‘fundamentals’ driving their bull-run? Most importantly, gold and silver is money, real money, with real tangible value. They have a proven 5,000-year history of being the ultimate ‘safe-haven’ against inflationary and deflationary periods – the masses have always flocked to their intrinsic value in times of economic uncertainty.
The current, and ongoing, financial crisis is resulting in the world’s Central Banks buying up gold and silver as the value of their ‘paper’ currencies are becoming increasingly debased by governments’ exceedingly loose monetary policies. Astute investors, particularly from the emerging markets in China and India, with a cultural appreciation for gold, are pushing up the price of precious metals as they too seek to preserve their purchasing power.
Also, we are now seeing hedge funds, diversifying their portfolios, purchasing gold as the western-world is rediscovering the importance of monetary metals. Finally, and most crucially, gold and silver mining production is becoming increasingly expensive, resulting in a growing supply and demand deficit, which bodes well for their long-term bullish outlook.
Investing in gold, at over £1,000 an ounce, will be out of the price-range of most students. However, an affordable alternative is silver bullion. At around £20 an ounce, silver it is still a bargain. During the last precious metals bull-run, in the late 1970s, merely 1,000 ounces of silver could buy a medium-priced family home. If you are interested, I recommend setting up an account at Bullionvault.com which provides the industry’s lowest margins as well as providing a secured vaulting service for a small charge each month. If you would prefer to store your own metal, then BullionByPost.co.uk is an excellent choice as well.
Gold and Silver is real money and the paper you carry in your wallet is just that!
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