Why do investors purchase precious metals during a financial crisis?

Buying precious metals or some specific commodities is a common way for investors who want to defend their portfolios during times of economic crisis. Because unlike stocks and fiat currency, there is no chance that the value of the metals will plummet to zero, and there is even a chance that you will make a profit when everything else goes down.

In this article, we will discuss how to invest in precious metals, as well as talk more about why investors acquire gold during times of economic crisis.

Gold, palladium, platinum, and silver are the most popular precious metals that come to people’s mind when talking about saving money from inflation.

Let’s talk more about gold

Gold has long been thought of as the best store of value. Not only common people and investors hold it, but also central banks and most prominent financial institutions. They do so all in order to conserve money rather than to make a profit on it. For the reason that it is possible to store gold bars for hundreds of years without them becoming rusted, ensuring that their value does not diminish with time. There are ways of putting your money in gold without physically owning it, for that we recommend you to find out what is a gold IRA and how can you use it.

Usually the world’s central banks’ reserves consist of a big part of gold bullion storage. They are stockpiling it in order to use it in case of a sudden economic downturn or other unprecedented crisis. It is widely known that the central bank of the United States has the world’s biggest gold reserves. There are other applications of gold. For instance, the jewelry market accounts for around half of total gold demand, next, with investment demand accounting for 40% of total world demand, and the final 10% being used in the industrial needs for various electronic items.

Industrial precious metals

The usage of precious metals in various electronic plates is pretty widely known. We’ve all seen videos of people collecting electronic circuits and “mining” various precious metals from them. For instance, the car sector uses palladium in the manufacturing of exhaust gas filters, making this rather expensive precious metal be in great demand due to the public’s desire for “green” automobiles.

In the coming years, most analysts believe that the palladium market will be depleted of its supply, forcing prices to be higher than what they are right now. There are other precious metals widely used in car manufacturing. For instance, platinum is popular too, and it is also used in a variety of other sectors, including oil refining and the creation of nitrogen fertilizers.

Unlike palladium, platinum is a valuable metal that may be used to create jewelry. Silver is widely employed in a variety of industrial applications, including electronics, medicine, the military, and the chemical industry and most notably in jewelry. It is the second most used jewelry precious metal after gold.

All the above just proves that precious metals are not bought only by greedy speculators. They are widely used in many industries and their usage is only growing.