Hard assets are commodities like gold, platinum, silver, copper, nickel, and oil. Based on their current asset performance, hard assets are in a Bull market that analysts believe could last for many more years. This can be attributed to the fact that hard assets are negatively correlated to stocks and bonds; meaning that they tend to behave differently and move in the opposite direction of equities. That said, hard assets are a popular way for investors to “cushion the blow” in the event that the stock markets take another tumble, or bond values fall.
If preserving wealth is your goal, then investing in hard assets is an attractive alternative to risky traditional investments.
Aside from their non-correlation to traditional investments like stocks, hard assets are recognized as a safe haven for an investor’s capital. Remember the Cyprus banking fiasco? What happens to investors nowadays who place their hard-earned money in a financial institution that cannot guarantee the deposits? Let’s just say that hard assets play an important role in risk management within a portfolio, and that if preserving your investment principle and wealth is your primary goal, then investing in hard or tangible assets is an attractive alternative to risky traditional investment options.
Another reason that analysts are fond of hard assets is that the economies in China, India and other emerging markets, are growing rapidly. In fact, according to the International Monetary Fund, in the next five years Asia will represent a third of the world’s output and its economies will grow nearly 50 per cent. To me that statistic implies that we can expect significantly higher levels of energy consumption, as well as a rising demand for raw materials like silver and other precious metals. Looking ahead, as businesses and governments forecast their need for raw materials, I expect that we will see an increase the demand for commodities, and in doing so, raise the value.
In most instances purchasing alternative investments is as easy as purchasing stock was “in the old days.”
Making an investment in hard assets is more appealing and much simpler than it was previously. In today’s marketplace there are an increasing number of investment opportunities that invest in precious metals, gemstones and even investing in containers. These offerings are available from an investment broker, and in most instances are as easy as purchasing stock was “in the old days.”