Most readers of this column own (or plan to own) physical precious metals – gold and silver, perhaps even some platinum or palladium. They may also own mining stocks.
But which category is "best"? It's like asking, "What's the most efficient exercise?" or "What's the best fishing lure?" Truth be known, it's really about what you wish to accomplish! Here is my considered opinion...
Precious Metals Offer Insurance First – Profit Second
One should strongly consider holding physical precious metals for "investment first, profit potential second."
The primary function of "metals in hand" is to help offset the possible loss of purchasing power that inflation or a changing business/regulatory climate might visit on a person's other asset classes, such as the broad stock market, real estate, collectibles, and certainly, bonds.
This last category appears to be ending a literal 30-year bull market, during which time interest rates declined (and bonds rose) to levels not seen in many decades.
(A change in the secular trend, to rising interest rates, would have severe ramifications for the value of bonds, whether or not they are held to maturity.)
A side advantage, common in India but not discussed in this country, is that gold and silver can be easily be "pawned" when a person might not have other options for a loan. Just like any item left in the pawn shop owner's care, precious metals can be redeemed when the loan has been paid off.
Indians have a much more nuanced – and relaxed – view about metals' ownership. Outlookindia.com takes the pulse about how its citizens deal with the idea of buying gold and silver, noting, "If you bought gold today and its price falls tomorrow, you don’t say, oh, wish I had not bought gold, I lost money. You just look at your gold and say, I have got 200 grams of gold. That’s it."