My Gold News | 21 February 2023

Why Diversification With Precious Metals is Essential to Your Portfolio

News Featured Logo

Just about everyone knows it is prudent to diversify investments in terms of stocks from numerous industries, several different mutual funds, cash, bonds, and so on. Some attempt to diversify by purchasing real estate. Yet an economic downturn is almost certain to affect traditional investments including the price of real estate. You can hedge against an economic correction by investing in precious metals like gold and silver. In fact, most investing experts argue diversifying with precious metals is essential to a healthy portfolio.

Investment Diversification Extends Beyond Stock Holdings

When someone speaks of diversification, most people think of putting their money in stocks that span a wide array of economic sectors. Yet this is merely one aspect of diversification. Even the most diversified investment portfolio is at risk for a monster decline should the stock market endure a significant correction. This is precisely why the savviest investors are adding precious metals to their portfolios. Precious metals are typically viewed as a safe haven when the economy endures a correction. Investors panic, pull money out of stocks, and redirect it to gold, silver, and other precious metals. There is significantly less risk with precious metals than stocks, especially during uncertain political and economic climates. This way, if the economy falters, if inflation spikes, or if insurance rates jump, precious metals won't be subject to considerable risk like their dollar-denominated counterparts. Gold and silver are not correlated to such traditional financial assets. These precious metals almost always retain or even gain value when other asset classes swing downward. In fact, gold outperformed most stock-based portfolios during the tech collapse in 2000-2002 and the '08 financial crisis. 


Diversify Your Precious Metal Holdings

Merely adding some gold or silver to your portfolio will not suffice. It is important to diversify your precious metal holdings to spread out risk and ameliorate access should you decide to use your metals during a period of crisis. So, don't strictly limit your precious metals inventory to large bars placed in a vault. Purchase a wide variety of precious metals ranging from gold to silver, palladium, and other metals. Make sure they are different sizes and forms, ranging from bullion to coins and beyond. This diversification will make it easy to barter should the economy tank. Furthermore, owning a number of different precious metals hedges against risk as there is always the possibility that one of the metals will significantly decrease in price. Spread out the money you dedicate to precious metals across gold, silver, palladium, etc. and you won't have to worry about losing a massive amount of money should one particular metal suffer an extreme price decline.

MyGold is Here to Help Diversify Your Portfolio

If you are looking for top-quality gold and silver, look no further than MyGold. Our gold and silver bullion is the perfect addition to your portfolio. These precious metals are exactly what you need to diversify your investments, hedge against risk, and grow your wealth as time progresses. Reach out to us today to learn more about our gold and silver offerings.