Some of the wealthiest people in the world are major investors in gold and silver bullion, and it’s something that they’ve done for centuries. When affluent investors consider wealth management strategies, they need to consider several factors, including diversification, wealth preservation, and maintaining generational wealth.
While the investment goals of the super-rich may differ considerably from the rest of us, there are still some very important lessons to be learned from their investment strategies. To see how gold and silver bullion can help your portfolio, it helps to explore why the affluent include bullion in their own.
1. Preservation of Wealth
Wealth preservation is just as important for someone who has grown their savings and is ready to retire as someone who owns billions of dollars. The closer you are to your savings goals, the more you need to take risk out of your investments.
Gold and silver have demonstrated their ability to retain their value despite inflation, recessions, and market crashes.
2. Protection Against Financial Instability
Geopolitical uncertainty, fears about economic growth, and anxiety about the stock market can wreak havoc on portfolios that are invested primarily in the stock market. While stocks can be a valuable tool for creating growth in your savings, all of those gains can be erased in a matter of days during a market crash.
Gold and silver prices tend to be uncorrelated to stock markets. If you want to isolate part of your wealth from volatile markets, bullion can help.
3. Risk Management
Investing in bullion is an effective way to reduce the risks in your portfolio. Not only are stocks inherently riskier than other assets like bullion, but bullion can also be employed to reduce the risk of fraud or mismanagement in your portfolio.
Many bullion investors prefer buying the real thing. Buying gold and silver from bullion dealers like Global Bullion Suppliers gives you direct access to your wealth. You can store and insure your wealth yourself without having to put your trust in third parties.
4. Decrease Exposure to Fear
Even some of gold’s biggest detractors are invested in the metal. Warren Buffett, famous for founding investment firm Berkshire Hathaway, has never been big on bullion, but nevertheless, the company invested half a billion dollars in gold mining company Barrick Gold back in 2020.
It is widely speculated that the move was a response to fears over the COVID-19 pandemic’s impact on the global economy. Stock markets are driven as much by sentiment and emotion as they are by economic fundamentals.
When investors are afraid, they tend to become bearish, pull money out of the stock market, and look for alternatives for their cash: including gold. When investors are afraid of the future, gold prices tend to rise.
An all-stocks portfolio is exposed to fear on the financial market, whereas gold provides more assurance.
5. Wealth Transfer to Future Generations
Bullion provides a relatively reliable and straightforward way to pass wealth off to future generations. Choosing to leave behind part of your wealth in bullion safeguards the value of those assets while also providing a relatively liquid asset that they can sell without much issue.
Bullion makes a great deal of sense for many wealthy investors, and it can play a role in your portfolio too. Diversify your investments, safeguard your wealth against inflation and management risks, and prepare your estate to provide for future generations with bullion.