We’re often asked whether it is a good idea to include precious metals in a portfolio. In this article we provide a high-level overview since, as is true of any investment vehicle, there are many factors to consider.
What Is a Precious Metal?
The category of precious metals includes gold, silver, platinum, palladium and many of the metals used in rechargeable batteries, such as cobalt, lithium and nickel. When people talk about investments in precious metals, however, they are usually referring to gold, so let’s concentrate on that.
The Many Forms of Metal
Most precious metals can be purchased in several forms. For example, you can buy gold jewelry, coins, bars, stocks (e.g., mining companies) or gold-focused exchange-traded funds (EFTs) and mutual funds. The form you choose relates to the function you want the investment to perform in your portfolio.
Metal for What Purpose?
The investments you’ve included in your portfolio are designed to 1) reach your goals, and 2) conform to your tolerance for risk, i.e., strike a balance among growth, income and security. For these reasons, a portion of your portfolio may be in steadier investments, while others have greater growth potential.
We apply the same tests to gold: Why do you want to include it in your portfolio? If your answer is: “I want a hedge against inflation,” we note that 1) gold tends to hold its value when the market falls (as it did during 2007 to 2009); yet 2) stocks outperform gold over the long term and in bull markets.
- Between 2014 and 2023, the value of gold increased 55% while the value of the Dow Jones Industrial Average increased 113%.
- Between 1995 and 2023, the value of gold increased 418% while the value of the Dow Jones Industrial Average increased 831%.
If you want to own an asset that you can use in case of a geopolitical or macroeconomic disaster, then you’ll want physical gold (e.g., bars, coins, jewelry). In other words, you want gold that you can access. If you keep physical gold, there’s a risk of theft, so you’ll need safe storage and may want to insure it.
If you invest in a metals-focused stock, EFT or mutual fund, the IRS will tax any capital gains as it does all other investments (0%, 15% or 20%, depending on your taxable income). If you experience a gain when selling physical gold or silver coins, however, the IRS taxes the gain as a collectible: 28%.
Five Fun Facts For Thanksgiving
In just a few days, we will gather with families and friends to celebrate Thanksgiving. With answers to these five questions, you too can dazzle your tablemates with your command of Turkey Day Trivia.
- How many pounds of cranberries are consumed during Thanksgiving week? According to Ocean Spray: 80 million.
- Which department store held the first Thanksgiving Day parade? Gimbel Brothers Department Store in Philadelphia.
- For which one holiday do Americas purchase fewer cards than for Thanksgiving? On St. Patrick’s day in 2020, consumers purchased only 6 million cards.
- How many calls do the turkey experts on the Butterball® Turkey Talk Line® field during November and December? 100,000. This link will take you to a list of turkey questions we bet you’ve never thought to ask.
- Can you carry a turkey through a TSA checkpoint? What about Grandma’s famous gravy? Yes on the turkey and stuffing, but stow that homemade gravy in your checked bag.
How We Help
Take Control of Household Debt
On November 7, the Federal Reserve Bank of New York announced that the total debt of U.S. households reached $17.29 trillion in the third quarter. Increases from the second to third quarter of 2023 were:
- Mortgage balances: Up $126 billion to $12.14 trillion.
- Credit card balances: Up $48 billion to $1.08 trillion.
- Auto loan balances: Up $13 billion to $1.6 trillion.
- Student loan balances: Up $30 billion to $1.6 trillion.
- Other balances (e.g., retail credit cards and consumer loans): Up $2 billion.
Observes put the average interest rate on credit card balances somewhere between 24.24% (Investopedia) and 27.80% (Forbes). High balances + high interest rates = Ouch!!
If you (or a loved one) are carrying debt that is eating away at both spending power and peace of mind, please give us a call. We’ve helped many people (young and old!) create debt-control plans. Just give us a call, and we’ll get started today.
Advisory Services offered through Obsidian Personal Planning Solutions, LLC. Securities are offered through Triad Advisors, member FINRA/SIPC. Obsidian Personal Planning Solutions, LLC, and Obsidian Personal Planning Solutions, Inc, are not affiliated with Triad Advisors.