Precious Metals Portfolio Update

in #steemleo4 years ago (edited)

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It has been a while since I have last reviewed my precious metal portfolio and given the recent additions and changes in the marketplace, I thought it would be a good idea to see how it stands. The financial markets have been quite volatile given the economic conditions around the world despite strong rebounds on most sectors of the global markets. However, the rebound has been driven by a flood of fiat liquidity provided by Central Banks and governments which I believe continue to act as credit cards; borrow now to deal with the payments later. My concern is that the hole being dug will render most fiat currencies much less valuable in the future because of the debt bubble that continues to build.

Many continue to be concerned about deflation in the short term instead of inflation given the weakness in the economy but I personally already feel the inflation every time I need to go shop for groceries and other goods and services that are essential to my family. This concerns me over the long term as we have learned how most families cannot take financial shocks like these; the stimulus has seemed to help but only "kicks the can down the road." Given the increased voice that families prone to impact have had as of late, it could be a scary path down increased unrest if longer term impacts are felt across the economy.

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Given the long term correlation the precious metal asset class has had to inflation and real capital conservation, I have continued my effort to raise my exposure by adding to my Collection. This is why I have target to keep my invested assets from 5-10% in the asset class. I had gotten closer to this objective over the last year with a more active addition cycle but the influx of additional capital from the sale of my home has made the allocation go down temporarily. It should get back towards 10% which is currently my medium term target given the circumstances of the markets and economy.

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I have been trying to focus on Silver this year considering the opportunities I personally see in value in the metal relative to others. However, the supply has been severely disrupted which has led to premiums being too high to make smart decisions in the short term. In fact, it did lead me to actually buy the Silver ETF earlier this year as it was the only way to increase my exposure quickly and actually at spot prices. That investment is not included here given it is held at a brokerage account but the value is up 30-40% since buying given the rebound we have seen from the lows in March. The thought is to hold it until I can move those assets to physical from paper as supplies improve (if they ever do).

I also made my first gold purchase in a while as I think that despite it being called a "crowded trade" in the investment community, it is a clear way to preserve capital over the long term. Given the way many financial institutions continue to build their gold reserves as reported, I think more supply disruptions can support prices for an extended period of time. I do not think that it will double or head to $10k like many say but the fact that the economics of gold are based on scarcity, it can be a good place to park capital. I think the same of Platinum which continues to be my largest allocation due to a particular US Mint Collection I have completed. I also think it is far undervalued given its long term price and relative scarcity to Gold. I also think it is less prone to market manipulation given the size of its Futures markets being lower than Gold.

I have to also admit that it has been fun going into the local coin shops this year as you hear many stories and thoughts of fellow collectors. While I am not in as deep of some of them, the reality is that it feels that something is brewing to make these markets bubble up in the environment of uncertainty we are experiencing. These are the type of investments that I make that I hope are wrong considering what it will mean for other aspects of our financial lifestyle but it is a good way to hedge at least. Only time will tell!

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I'm glad I diversified into precious metals last year, not too heavily, but I quite like my collection of gold and silver coins, I had a look at the other too, but they were just too pricey!

With Silver especially, I had no idea it was such a community-focused thing, I actually classify it as a 'fun' investment!

And it has held its value quite nicely. Up a little even, I think,

Diversification helps plenty in these uncertain times! I really do have fun with it although not as much as others!

If I wasn't contemplating moving abroad I'd probably get into buying coins regularly and join in the whole posting about them, it does look fun!

I get the feeling Silver is a bit more of an American thing rather than British though!