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Ongoing concerns about inflation in the US dollar have sent some investors scrambling for so-called “safe havens.” Some commodity investments are considered to be safer than bonds or stocks due to their historic resistance to losing value over time.
These commodities—primarily platinum, gold, and silver—have been associated with wealth for centuries. Recent weakness in the stock market has some investors turning to these “safe haven” metals once again. Is now the time to follow the shrewd investors to safety, or should you buy stocks while they’re cheap?
The key to making money on the stock market is mitigating your risks. While high-risk moves can pay off tremendously, they can also cost you quite a lot of money. Your given “risk tolerance” as an investor should be linked directly to how much longer you plan on having your money tied up in investments.
For example, if you’re in your 20s, you probably plan on having your money invested for decades to come. Safer investments are going to be your best option, as they offer the highest likelihood of long-term growth. If you’re in your 70s, meanwhile, you might not plan on keeping your money tied up in investments for much longer.
In that case, you should consider investing in higher-risk products that also offer a higher potential reward. After all, even if things pan out poorly over the short term, your money won’t be tied up with these investments long enough for it to do too much damage to your portfolio.
Precious metals like gold, silver, and platinum have proven to be resistant to inflationary pressures in the past. This has made gold a preferred store of value to transfer wealth across generations. When markets are weak and inflation speeds up, investors often turn to gold to safeguard their wealth against the whims of regulators and central banks.
Like all investments, gold’s value is determined by what investors think about it. As it turns out, people just like gold. It’s pretty, it can be made into jewelry, it doesn’t corrode, and it’s been synonymous with wealth and currency for most of recorded history.
Is now the right time to invest? Bearish investors are swift to turn to gold when things get tough on the stock market. Some investors, however, might take a weaker stock market as a chance to scoop up shares of companies while they’re cheaper in the hopes that they rally when the market returns to normal. Which is right for you? That depends on your risk tolerance.
