Precious metals have always been stockpiled by individuals, governments and central banks as a means of preserving wealth. Precious metals are unique in the sense that their value is not determined purely by traditional supply and demand but also by their popularity as a safe-haven asset in times of economic uncertainty.
Furthermore, as seen in recent weeks, a huge supply of precious metals is already in circulation which is essentially being hoarded and this can dramatically affect supply even when mining production is flat or declining.
Precious metals overview
In the face of unprecedented losses on global stock markets it can be difficult to know which precious metal to invest in now. Especially, when the full scope of the economic impact caused by coronavirus is yet to be seen.
If you want to decide what precious metals to invest in this spring, you’ll have to make a deep analysis, which is rather complicated in times of highly volatile markets.
Typically, precious metals, gold in particular, are viewed as safe havens during times of financial volatility and in the early days of the coronavirus pandemic they did see initial price gains. The losses seen in the past week have been caused by the sheer scale of the economic crisis we are currently in. This has forced some investors to liquidate their precious metals to free up cash or cover losses.
This necessity for capital coupled with an increased movement towards the surging US dollar initially led to significant drops in precious metal prices across the board. As of March 24, they were recovering significantly with gold experiencing its largest single day price increase in 11 years, rising by 6 per cent.
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Best precious metals to invest in now
Unlike stocks, precious metals are traded 24 hours a day and seven days a week. The value can change based on a multitude of factors including consumer demand, industrial demand and, in times of economic uncertainty, demand from investors seeking a safe haven for capital.
The number-one precious metal around the world, gold is less affected by traditional supply and demand and more by investor sentiment and macro-economic factors. In times of volatility, inflation or economic uncertainty the price of gold will typically rise. In the current financial crisis gold prices initially declined as capital moved to another safe haven, US dollars.
Gold prices have rebounded in recent days and if performance in the past financial crisis is a good indication then gold prices should see increased upward movement prior to the stock markets recovering. With mine closures tightening production and vast expenditures by the American government weakening the dollar, gold should be one of the best precious metals to invest in April 2020.
Let’s take a look at the latest gold price analysis, prepared for you by our chief market strategist David Jones.
While silver as an investment can exhibit similar attributes to gold, it varies greatly in the factors affecting price. More than 50 per cent of the silver produced annually is used in industrial applications.
In the current economic climate, we should expect a sharp decline in industrial output as a recession is all but inevitable. While there will be some demand for silver as an investment in such volatile times it is impossible to ignore the potential for a significant reduction in demand in the short to medium term. For this reason, silver may not be the top choice when deciding what precious metal to invest in April 2020.
Still, if you trade precious metals with CFDs, the downward price movement may also provide great trading opportunities. For that reason, you should follow the latest silver market news and analysis to spot the best place to enter a trade.
Platinum, recently referred to as the rich man’s gold, is scarce even in comparison to other precious metals. It exists as a hybrid between gold and silver in the fact that it is highly valued as a store of wealth but also widely needed for industrial applications, particularly the production of catalytic converters for automobiles.
Platinum has the potential to increase in price in the coming months as investors seek diversification away from the stock market, but this upward pressure may be negated by the reduction in demand from industrial users.
It is also relevant to note that platinum production is highly concentrated with almost all production occurring in Russia and South Africa. Its high usage for industrial applications and the potential for volatility due to concentrated production areas makes platinum subject to extreme volatility in the short to medium term. Provided that you conduct careful market analysis, this volatility could lead to increased number of trading opportunities, making platinum one of the best precious metal to invest in now.
The bottom line
In past financial crises precious metals have rebounded much quicker and more sharply than the overall stock market. As world governments continue to announce huge stimulus packages, the economy should stabilise and gradually begin to climb. The announcement of the American government to allow unlimited spending as needed should provide additional upward pressure on precious metals.
If you are looking for the best precious metal to invest in this spring, consider trading them with contracts for difference (CFDs), as they can be used to profit even in a declining market. As with all securities, investing in precious metals should be based on your individual investment goals and risk tolerance. Capital.com provides all the research tools and instruments you need to make thorough trading decisions and profit in volatile markets.