FX.co ★ Five myths about investment in precious metals

Gold is not money, it is a relic of the past

Many large market players and global central banks have such misleading information. This myth is contrary to the actions of the largest bankers which continue to store and accumulate gold as a reserve. In 2018, central banks around the world, headed by Russia and China, added hundreds of tons of gold to their reserves. In the first quarter of 2019, Russia boosted the purchase of the yellow metal by 68 percent. Gold is not a “barbaric relic” for major world economies striving for independence from the US dollar.

Silver is not a means of payment

Many analysts, who consider the yellow metal to be money, deny this right to the white metal. However, it is wrong. When the United States was founded, the authorities took into account the value of the US dollar to a certain amount of grains of silver which reaffirmed the monetary status of the white metal. Previously, the US dollar was equivalent to 371.25 grains (three quarters of an ounce) of silver. However, later, silver was taken out of circulation and replaced with cheaper metals. At present, silver is not stored in foreign-exchange reserves of some countries and is not purchased by central banks.

Leading precious metals carry risk for investment

This myth is part of the propaganda of Wall Street financiers against the yellow metal. However, a conflict of interest has arisen: the financial industry loses commission fees when investors put their money in safe-haven assets. Analysts vote for a reasonable asset allocation in the investment portfolio where the precious metals account for between 5-10% and 20-25%. Investing in only gold and silver is not recommended, but it is also risky to have no precious metals in the portfolio.

Cryptocurrency is more valuable than gold

Many investors are confused by the term "digital gold", recently appeared amid the development of new means of payment - virtual money. However, cryptocurrencies are not similar to gold and they will hardly be able to replace it. Some market participants believe that the yellow metal is inferior to digital assets, but this is not true. Gold is a time-honored financial cushion which is not the case as for virtual means of payment. The cryptocurrency market is being actively developed, but it is not known whether they will be valuable 100 years later.

Collectors' coins are more profitable than bullion ones

According to experts, such incorrect information is usually provided by merchants of numismatic coins who are trying to sell allegedly rare collectors' coins. Being no judge of the topic, investors buy them and lose out. Such highly profitable and relatively illiquid items as collectors' coins are suitable only for those who have wide experience and knowledge of numismatics. Thus, purchasing ordinary bullion coins is an effective way to invest in precious metals.