Why Buy Bullion?

When thinking about investing in gold, silver, platinum and palladium you are considering an investment in a physical asset, like the bricks and motar of your home. Historically the physical bullion has been traded during periods of high economic uncertainty, world wars, during times when the stock market is closed, banking closures occur and currency purchasing power has dissapted over-night through hyperinflation. The bullion was traded and can become a store of wealth during periods of uncertainty. Bullion provides the investor with confidence that they will always have a medium of trade no matter what the future brings.

Throughout history we have seen a number of artifical replacements for the physical assets, which attempt to replicate the characteristics of the physcial asset, but all have eventually failed. Today these come in the form of exchange traded funds, options, warrants and other financial derivative instruments. The problem with all these substitutes is that at the time when the most value or highest wealth transfer will occur, is often during a period of turmoil whereby institutions such as the share market may be closed. This will often result in the effectiveness of these instruments being rendered worthless when security should be being realised.

The other concern with these artifical substitutes is that there construction is not necessarily consistent with the underlying physical assets. A number of these financial instruments use internal leverage, debt and even potentially hold questionable stores of actual bullion backing. These unnecessary complications can end up causing the price action of the physical and the derivative to diverge, rather than track with consistency.

Physical bullion has historically been regarded as one of the most secure and private investments that a person could own, and provides true diversification for an investor's portfolio. Diversification which is not directly linked or correlated to either the equity market or property market and can provide an inverse correlation to the bond market. Bullion has been the store of wealth for over 500 years.