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Why You Can Still Believe
in the Value of Precious Metals




We are in the middle of the economic crisis, but investor sentiment has weakened somewhat, following the sharp correction in gold's and silver's price.

Despite gold's sharp correction and the media's negative news about the metal, there is plenty of hope for those who have previously bought investment metals. Prime Values has dug deeper, analyzing various factors. Indeed, we can still believe in precious metals for long term investments.

There are more than 10 solid reasons for investing in precious metals.


Let's see them one-by-one:

 The cascade fall of precious metal prices since mid-April 2013 had happened due to exchange-traded fund liquidations
Physical gold buying is still strong, especially in Asian countries (one needs to separate physical gold buying and paper-based speculation).

 Gold's and silver's price are reported to a currency
If gold's price dropped in terms of US dollars, the same thing is not true for gold's price in Japanese yen, so the shiny metal would still be a very good investment for you if you live in a country whose currency is devaluing (looking merely at the price of gold in US dollars does not reflect its true value in other countries!)

 Use precious metals to diversify your assets
Don't put all your bags in one basket, don't invest blindly in precious metals, but make sure a sizeable proportion of your wealth are stored in these hard assets that can stand the test of time better than any currency!

 The price correction was due after a decade-long bull market
Experts consider this normal, it has happened in the past and gold and other metals will climb higher as soon as they hit the bottom - cheaper price stimulates buy-ups (both ETF's and physical metal), therefore and increase will follow the price crash

 As speculation brought gold's price down, it will bring it up!
Speculators gain profits from price fluctuations, it's like riding waves. They buy gold or silver to sell at a higher price. Speculators will have the interest to buy up massively once it reaches very low. The massive buy-ups will bring gold's price higher. It's not the individual speculators, but the major financial institutions that count tremendously in these fluctuations.

 Everything fluctuates, so do precious metal prices - and it's normal
Real estate prices, the dollar's value in terms of other currencies etc. - so why should you lose faith, just because precious metal prices fluctuate?
Your home's and land's price may go lower, but you don't lose the perception that they still represent value and keep hoping for a higher price, which will eventually arrive!
It's important to know when to enter the market long (when to buy). Fluctuations are to be expected, but choosing the right time to buy is essential in securing a good long-term investment.

 A global gold run is currently undergoing!
Countries are repatriating and buying gold massively (Germany, Russia, China, Turkey, Brazil, Venezuela, Ecuador, Switzerland, The Netherlands, Azerbaijan, Kazakhstan are just some of many who are either repatriating their foreign vault-held bullion or are adding more to their bullion stocks) - if so many countries are engaged in gathering physical gold, doesn't it signal that something is about to happen? Obviously the World's governments know something that the masses don't.

 Consider precious metal investments long-term investments
Though many have bought gold hoping that they will become rich in a matter of months, due to the rising prices - but that's not the correct way to look at precious metal investments. Choose gold, silver, platinum and other investment metals for securing the long-term safety of your wealth. Occasional fluctuations shouldn't determine you to sell.
If you're more interested in speculation, then you could buy ETF's or even buy and sell physical metals at particular moments - when you consider the prices to be adequate for collecting profits.

 The worst of the global economic crisis is still ahead of us
The situation of the global economy is getting gradually worse. The recovery isn't coming yet, except for a handful of countries, restricted geographical areas.
Monetary easing fever has caught Japan too, the ECB is also easing and the Fed is continuing their monthly bond and treasury buying program with digitally-created dollars (worth 85 billion USD each month!), in addition to these - more countries are slowing down economically (Chinese growth is the lowest in 14 years, France just entered recession, German industrial production is down), the overall global economic situation is worsening.
All these are trends pointing out to possible currency devaluation. If you hold too much of your wealth in currencies, then you're exposing yourself to a tremendous risk.

 Currency debasement is highly likely to happen in the coming years
Europe, the USA and many Asian countries are threatened by this possibility, because: too much money has been printed and this will eventually reflect in inflation, but also because of a mix of other factors - economic productivity is dramatically decreasing, purchase power is decreasing etc.
During a deflationary crisis (like the current one that we're witnessing), countries try to tackle the problems by inflating their currency, which is suppose to stimulate exports.
Japan is already at it - check the article about Japanese monetary easing. In order to cope with deflation, which threatens the exports, Japan is inflating the yen. This has already lead to more expensive gold in Japan.
Uncontrollable (some call it "runaway") inflation can lead to hyperinflation like it happened in the 1930's. Your money holdings may lose almost all of their value, therefore it's wise not to store wealth exclusively in currencies.

 Precious metals have intrinsic value
Although their price has (temporarily) fallen, they are valuable by themselves, whereas paper currencies don't have intrinsic value - obviously it's better to own something of real intrinsic value than something that can easily devalue (currency debasement, hyperinflation can threaten the value of your wealth stored in paper bills and bank accounts)

 Platinum and palladium didn't crash
Not all metals crashed. Silver and gold did indeed dip sharply, but this was primarily due to the exchange-traded funds. In case of platinum and palladium there are no ETF's and the appetite for these metals has kept prices in a similar range.
If your precious metal portfolio is well-diversified, then the risks are split. If you would have owned significant amounts of platinum, for example, then the gold correction would not have affected you as strongly.

 The are some very optimistic scenarios for precious metal prices
Overall, one can say that one thing is certain: after this correction, a spike will follow. The dimensions of the next price increase remain to be seen. However, after which gold had dropped to roughly half price in 1976, the following bull run propelled it 800 % higher! Although the 1976 scenario is probably the most optimistic, it's not excluded that gold will surpass its previous high, which was above the 1,900 $ level.
Another well-known thing in the precious metal investors' community is the fact that silver has high profit-making potential.


In conclusion, there are several key things that can help you invest wisely in precious metals (and other hard assets, if you'd like): choosing the right time to buy, allocating an adequate amount of funds for your purchase and diversifying your precious metal holdings as well!

Buy when prices are low. Don't over-invest - remember that every investment brings risks, not just opportunities! If possible, invest in multiple metals - diversification splits risks, increases potential profit-making.

Prime Values offers free professional information and advice, deep details that can help you learn how to invest in precious metals, in case you're at the beginner's first step.





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