COMMENTARY — Investing in precious metals

There have always been numerous compelling reasons for owning precious metals and they can be characterized as follows:

* Precious metals (especially gold) have historically maintained their purchasing power over the long term.

This “storehouse-of-value” attribute is understandably appealing to investors; by serving to preserve wealth over long periods, precious metals act as insurance against political or economic catastrophes. * Ownership of precious metals is also widely recommended as one of the best methods of hedging against currency devaluation or currency degradation (commonly known as inflation).

* Based on stringent analysis completed over the past 10 years, the inclusion of precious metals (particularly gold) in a well-balanced investment portfolio is extremely useful with regard to moderating risk while, often surprisingly, enhancing total returns.

* Precious metals, unlike all currencies and most other investments, have absolute, worldwide liquidity at easily discovered prices. In fact, the London afternoon gold fix is probably the most widely disseminated piece of information on a daily basis.

* Precious metals such as platinum and gold are eminently portable and are desired and recognized as valuable the world over. It would not be unreasonable to suggest that 90% of the human race recognizes gold as being highly desirable.

* Gold, platinum and silver traditionally have played a significant role in enabling individuals to maintain wealth in relative secrecy, without the knowledge of governments, tax authorities or divorce lawyers. Precious metals do not depend on the credit of the issuing party, whereas most other investments — such as currencies, stocks and bank deposits — do. * Besides their value as investments, precious metals can serve as speculative vehicles for the more aggressive buyers. Price volatility in reaction to global economic and political conditions offer significant opportunity for the nimble investor.

When reviewing this list, it is no wonder that the desirability of precious metals has so easily endured the myriad shifts in trend and fashion among investors. Quite simply, no other commodity offers more versatility, opportunity and reliability.

— From an article by U.S. trader Leonard Kaplan in a recent issue of “The Australian Nugget Journal.”