Wealth Preservation
The most important reason to include precious metals in portfolios today is that bullion provides wealth preservation in the current financial reality. Gold has been used as money for over 3,000 years. Generations of the world’s wealthiest families have preserved their fortunes using gold, silver and platinum. For centuries, the words ‘gold,’ ‘silver’ and ‘platinum’ have been used to indicate the highest standards of excellence, and the allure of all precious metals is as compelling today as it has been throughout history.
Safe Haven
Precious metals provide the ultimate safe haven. They offer a strong defense against inflation, financial crises and the fiat (paper) currency destruction we are seeing around the world as governments erode purchasing power through currency debasement. In the last decade, the Canadian and US dollars, Euro, Pound and Yen have all have all lost more than 70 percent of their purchasing power against gold. This trend will continue until fiscal and monetary discipline is restored, and there is nothing on the horizon to indicate that will happen any time soon.
True Portfolio Diversification
Precious metals are negatively correlated to other asset classes, so often perform best when the other components of a portfolio, such as stocks and bonds, are performing poorly.
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