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How Can a Financial Crisis Affect Precious Metals and Coins?

Having a diversified portfolio of hard assets is an important way to stay financially secure in times of economic turmoil and inflation. Although precious metals and coins are often a smart investment, their value can be affected by economic fluctuations and financial crises, both positively and negatively. Here’s a look at how a financial crisis may affect precious metals and coins.


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Of all the precious metals, gold is the most time-tested and safe hard asset. Because it isn’t as tied to industry and the business cycle as other metals, gold is a counter-cyclical asset, which means that it tends to perform well in a suffering economy. Investors see gold as a reliable alternative to more uncertain options, such as stocks. Prices for gold have increased in nearly all of the economic recessions of the last fifty years, including in 2008, when gold was one of the only growing alternative assets.


Unlike gold, silver has considerably higher industrial usage, making it more likely to perform poorly during difficult economic circumstances, at least initially. If a recession causes a decrease in industrial production, the demand for silver dwindles, lowering its price. However, the price of silver typically follows gold, sometimes slightly delayed, and increases in value as the currency depreciates due to central bank intervention. Over the past few months, the Federal Reserve has injected over $3 trillion of liquidity into the economy, causing silver prices to increase by over 50%.

Platinum and Palladium

As opposed to gold and silver, platinum and palladium don’t have a long history of being used as investment vehicles in the form of bullion or coins. Because demand for platinum and palladium is primarily industrial, prices tend to fall during financial crises and industrial recessions, making them a better investment in strong, optimistic economies. However, all precious metals can be used as a hedge against inflation, even when industrial demand wanes.

Precious metals and coins can be strong assets in a diversified portfolio, but it’s essential to pay attention to the economy, the business cycle, and central bank monetary policies to ensure that you’re well-positioned. At Atlanta Gold & Coin Buyers, we buy, sell, trade, and appraise precious metals like gold, silver, and platinum, as well as old and rare coins. To request an appraisal appointment, contact us today by calling 404-236-9744.

Tony Davis
Tony Davis