Over thousands of years, precious metals and other forms of raw materials, such as oil, have been known to bring wealth. In times of instability, many saw them as a safe haven, used to preserve wealth and add security to a financial future that was otherwise uncertain.
In the dynamic 21st century market, traders often see the raw materials business as an alternative to traditional investments like stocks and bonds on Wall Street.
As a result of some strong underlying factors, precious metals, which are a big part of the raw material industry, have proven to be a viable investment over the past decades. This piece draws its inspiration from the thoughts shared with us by Josip Heit, a renowned serial entrepreneur and businessman with valuable experience investing in the raw materials and blockchain sectors.
Heit has pioneered many startups in the past. Currently, he is the CEO and chairman of “Gold Standard Banking Corporation AG” as well as the Chairman of the Board of “GSB Gold Standard Finance Europe Se” in Lichtenstein and “GSB Finance Fund” in Luxembourg.
According to Heit,
“Raw materials, such as precious metals, will always have inherent value as they are real and finite resources that cannot be manipulated by any single government or financial institution. Unlike paper currency, they can not easily be issued on the whim of a nation. This gives a unique edge to precious metals which results in multiple investors’ gains.”
In the past, precious metals, such as gold and silver, were important because they were used as a currency, and another aspect of the raw material industry, namely oil, has also seen an increase in value over the past decades. Today they are considered valuable because of their industrial uses as well as the huge investments that are being made into these sectors every year.
However, a lot of questions that recently started trailing the internet revolve around another question: “What raw material is the best investment for 2020?” According to Heit, various investors have different needs, and, before making a decision, it is important to be aware of the factors that affect the supply, demand, and prices for each raw material.
Following are Josip Heit’s thoughts on the five raw materials that he considers to be the most sought-after raw materials for a viable investment in 2020. Interestingly, palladium is topping Heit’s top five “most-sought-after” list.
Palladium is a lustrous white material. It is one of six metals in the platinum group (along with ruthenium, rhodium, osmium, iridium, and platinum). Approximately 85 percent of all palladium ends up in car exhaust systems where it helps turn toxic pollutants into less damaging carbon dioxide and water vapor. It is used in dentistry and jewelry. Palladium is also used in electronic devices.
It has a lot of potential to gain value as supply has not been able to match the ever-growing demand. Usage is growing as governments, especially China, are tightening legislation to crack down on automotive emissions, pushing manufacturers to increase the amount of precious metal they are using in vehicle manufacturing. This gem is worth keeping on your radar!
Gold, a long-standing preference for traders of precious metals, has been used for thousands of years as a store of value. Gold is regarded as an asset that, despite economic slowdowns, appears to hold its value well and can comfortably cope with big recessions. Gold is also an ideal hedge against currency assets throughout periods of high inflation.
In a recent interview, Josip Heit claimed that there is a great possibility for gold to hit $1,600 in 2020. His prediction is based on the fact that many gold-backed cryptocurrencies are already springing up, this development will surely have a positive effect on the price of gold.
While gold is a great investment, some new investors may find the cost of buying substantial quantities of gold a bit challenging.
Silver tends to be a comparatively “better” option for first-time buyers as it is much less costly and, thus, offers the opportunity to make multiple smaller investments over time. There is widespread industrial use of silver in many sectors, from technology to solar energy, which means that there is a constant demand for it.
However, because silver is comparatively low-priced, you will need to buy more to achieve a significant return on your investment.
Platinum, commonly used in catalytic converters for automobiles and for jewelry, might not be as essential of an investment as gold or silver. Nonetheless, it can be a good investment. Historically, its value was greater than that of gold, although, in recent years, gold has outperformed platinum.
The main advantage of platinum is that, since it is not a major investment element, it is not susceptible to the same surges that silver and gold are vulnerable to. Instead, the value appears to be more consistent through different market conditions.
Even though oil is not among the family of precious metals, it is one of the most used raw materials. Oil makes the world go round, and there is no sign of this changing anytime soon. Petroleum continues to remain in the highest demand.
Petroleum also has a variety of industrial uses because it can be used as a lubricant and is a key component in the production of plastics. The main advantage of oil as an investment is that the world depends on oil. It is needed to run society, so the demand for it will always be there. Because of this, it makes a great investment choice.
To summarize, for a long-term portfolio, Heit believes that raw materials should be part of everyone’s investment strategy. He sees precious metals as an insurance policy. If all hell breaks loose in the financial system, at least raw materials will still have a tangible value.
Having said that, Heit firmly believes that no investor should go all-in on one particular investment or asset class, however, certain metals should have a heavier weight on your portfolio based on their future potential.