The average millennial has a net worth of just $8,000. That’s a scary number, especially when you realize they also have less than $5,000 in savings accounts. Between massive student loan debts, the cost of living, getting later starts in life and all other sorts of issues, it’s little wonder that millennials aren’t thinking much about investment beyond maybe contributing to their retirement accounts.
Especially given the fact that gold and other precious metals are considered a safe haven as opposed to one of the first investment vehicles you should buy, why would millennials go into it? Well, there are five reasons why precious metals should be part of your portfolio, even when you’re young:
So, let’s get started.
Investment in precious metals is hardly a new thing. Gold, after all, first became a precious commodity in Egypt back in 3,000 BCE. By 546 BCE, historians are able to trace silver coins being introduced to Persia after it was invaded and taken over by Lydia. Mercantilism, a prominent economic system in Europe between the 16th and 18th centuries, was designed to keep as much gold and silver in a state as possible by manipulating the balance of trade. (This is pretty bad economics, but it shows just how important gold and silver have been to economies.) For ages, countries would operate on the gold standard, which pegged paper currencies to the yellow metal.
Not only that, but it’s a historical form of wealth that’s seen a major comeback since the turn of the century. The price of gold hit bottom in 1999 and has increased from under $300 an ounce to in the area of $1,500 since then. Particularly
When millennials think about inflation, they’re likely to think about the 1970s and the Carter years. However, inflation is always taking place. The question is what rate it’s taking place at.
You don’t need the kind of hyperinflation we had during the 1970s to need something in your portfolio that’s going to protect against the dollar being worth less and less. A bar of gold is always going to be a bar of gold, silver coins will always be silver coins, platinum is always going to be platinum. And that’s the thing — just like everything else, they’re going to increase in price. The dollar, meanwhile, will always suffer from inflation. It’ll almost always be worth less than what it was before.
Plus, there’s always the fact that precious metals are where investors run to when the stock market is in retreat. That’s why, if you pay attention to the stock market, you’ll always see gold spike in the midst of a downturn. It’s a safe haven.
Yes, millennials may be putting money away for retirement in their 401(k)s , and the stock market may be a good place to earn money, too — but they have to consider the fact that they’re also going to have to look at the ups-and-downs of the Dow Jones. If you were retiring in 2009, in the midst of the financial crisis, not having balanced your portfolio with precious metals would have meant you would have taken a major hit in your lifestyle. As well as being great investments on their own, gold, silver and platinum are always great ways to ensure safety and to diversify your portfolio. You may be young yet, but it’s a great way for millennials to ensure that they’ll be ready for retirement.
Let’s face facts: When you’re putting money into your 401(k) or other savings accounts, you don’t really think about diversification. Especially being a millennial, you probably don’t have a whole lot of extra disposable income to invest.
And yet, a lot of small purchases add up — and if you forego them, you can put a little into precious metals like gold, silver and platinum every month. No, I’m not going to make an avocado toast joke here, millennials. In 2018, a Fidelity Investments study of millennial spending habits found that 86% of millennials made a purchase they designated as a “treat” — something to bring them joy — each month. Okay, that’s fine, you say — except these “treats” were defined as costing at least $110.
That’s a lot of money — and money that could easily go into precious metals.
There are plenty of coins and bars that a few months’ “treats” could easily buy. Over time, that adds up to a fairly sizable precious metals portfolio — and one that’s only going to add up as the millennial generation gets older.
Gold has long been recognized all over the world as a commodity but it’s been especially popular in two countries: China and India. In both nations, gold jewelry was often seen as an investment for a young child, something that would appreciate as they reached adulthood. That view of gold as a safe investment has continued into the 21st century — although now it’s taken a different form.
As the South China Morning Post reported, both countries account for half of the world’s gold consumption. Earlier this decade, China introduced exchange-traded commodities backed by metal. That means that it’s going to be easier for the Chinese to invest in. India has also long been the world’s biggest consumer of the yellow stuff. Both economies are growing rapidly and are importing it in massive numbers.
“A new development trend of Chinese gold enterprises expanding overseas has already emerged,” Song Xin head of the China Gold Association, said in 2019.
“Some enterprises are quick and others slow, but all of them are continuing to expand the vigor of their ‘expansion,’ and the overall progress of internationalization is unstoppable.”
And then there’s other sources of demand for gold, silver and platinum. You’re probably holding one of them in your hand right now. In fact, odds are you’re reading it on there. Gold is by far the best choice for building integrated circuits and even when demand for the metal is low in financial markets, the demand for it in technology is high. In November of 2017, the U.K. Telegraph reported that “84.2 tons of gold went into electric wiring in smartphones and LEDs,” a 2% rise over the previous year. That’s only going to accelerate. Silver and platinum also have major uses in cell phones too, something that’s going to increase demand.
Also, keep in mind that the world’s central banks currently hold one-fifth of the world’s gold and are buying more and more of it. Gold is a finite resource. So are silver, platinum and other precious metals. With all of this demand and a limited supply, you can imagine where the price is going to go.
These are just four of the reasons why millennials need to consider precious metals as part of their portfolio. It’s practically a no-brainer. And, if it doesn’t work out for you, they’re easy to liquidate and maintain — no broker’s management fees like with stocks, no closing costs like with real estate, no transaction fees, nothing like that. It’s a low-risk, high-reward way to add to your portfolio. And it’s certainly a better use of that $110 than those “treats.”
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