One of the main differences between stocks and precious metals is that stocks are classified as equities. This means that stocks give their holders ownership of a portion of the company that the stock is issued for. Precious metals on the other hand do not provide ownership in a company. Rather, the holder of precious metal own physical product.
Make Money from Precious Metals
Investors in precious metals make money from increases in demand of precious metals. As demand increases for precious metals, their value rises. Similarly, lower supply of precious metals can have a positive influence on their prices.
As companies generate more profit and improve their business standing, the value of their shares can rise. This increase in value gives stockholders the opportunity to sell their stocks or even receive dividends at dates specified by the company.
What do precious metal investments, stocks, and prices have in common? A lot. Precious metals have become more desirable as an investment alternative to stocks, highlighting the shifting winds in investor’s approach to implementing strategies that satisfy their risk appetite.
Many believe that stock market investments are better than investments in precious metals because returns from the stock market can be significantly higher. For the past 19 years, an investment in the stock markets has provided returns of 400% while investments in precious metals have provided lower returns.
Stability of Precious Metals
Precious metals, particularly gold, silver, platinum, and palladium, have served as great alternatives in times of economic downturn where stock markets suffer from negative growth. Over the past 19 years many companies (listed) have come and gone as demand for their stocks reduced and prices plummeted. Precious metals, however are still on the scene.
There are risks associated with precious metals which owners of stocks may not be exposed to. There is no guarantee that precious metals will continue to be the safe haven we have come to know them as.
There are dangers of theft that can arise as a result of ownership of precious metals. Even with a safe, one can easily become a target for theft if word gets out that precious metals are stored at one’s home.
For many years, gold has served as the prime safe haven among precious metals. Banks and households around the world continue to bet on gold, investing unfathomable sums every year. To many, investing in gold is not an option but a necessity. The proof is in the pudding as previous economic downturns have shown.