The Psychology of Investing in Gold and Silver

 Throughout centuries, Gold and Silver have been seen as valuable assets for investing and growing ones wealth. Just like all investments, psychology plays a critical role when investing in precious metals. This is driven by both technical analysis of the markets as well as external factors that can drive demand.

 Tangibility of Physical Gold & Silver

 Now with paper trading and most investments being done digitally, one major factor that separates Gold and Silver from other investments is the physical aspect. Gold and Silver still act as major players in the investment world while maintaining their physical aspect in the form of bullion and coins. This offers a sense of ‘real’ value as it is something that will always be in your full control and in your direct possession. Moreover, this offers a psychological comfort to investors when they can physically hold their gold and silver coins or bars in the palm of their hands. This feeling of stability and comfort cannot be replicated with the likes of stocks or bonds. As a result, the perception of tangibility helps reinforce the ‘safe haven’ aspect of the precious metals during turbulent times.

 Fear of Inflation and Currency Devaluation

 For decades now, Gold has been seen that the ultimate hedge against inflation and currency devaluation. This psychological fear has stayed in the minds of investors and as a result, whenever we see news of rising inflation, we can see a direct correlation in gold and silver prices going up. Moreover, whenever we see the purchasing power of the dollar going down, we can see more investors flocking to precious metals as a means of preserving their wealth. 

 Having a Diverse Portfolio

 Seasoned investors know very well that putting all your eggs in one basket is a big red flag investing. There is a psychological comfort that takes place that plays when an investor has a diverse portfolio as it allows them to be worry free knowing that if one investment fails, they have others to back them up. Moreover, with precious metals being a safe haven asset, having some holding in your portfolio will give you a sense of relief knowing you have an asset that will hold its value and stand the test of time.

 Economic Uncertainty and Crisis

 Due to their safe haven capabilities, during times of economic crisis and uncertainty, we need to see the demand for gold and silver go up and often skyrocket. This is a direct reaction of the psychological factors that are surrounded by the perceived reliability and security that they offer.

 Understanding the psychology of investing in gold and silver is an interesting topic that goes into emotions, economic principles and market studies. Having a portion of your portfolio invested into precious metals can be impactful and prove to be fruitful to your long term investing goals. Be sure to check out AU Bullion’s collection of Gold and Silver bullion investment products for your next precious metals investment!