Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by U.S. News & World Report in an article — by reporter Matt Whittaker, “Should You Invest in Silver as an Inflation Hedge?” — regarding whether silver and other precious metals are a good inflation hedge.
Is silver an inflation hedge?
Silver tends to be a weak inflation hedge, not nearly as stable or widely recognized for this purpose as gold. Investors can opt to enhance the diversification of their precious metal holdings by incorporating gold, silver, platinum, or palladium into their portfolios. This strategy helps offset the risks associated with the distinctive attributes of each metal. However, the efficacy of silver, or any precious metal for that matter, as a hedge against inflation, hinges on the prevailing economic conditions and market dynamics at a given point in time. The value of silver is more subject to its use and versatility as an industrial metal input in electronics, mirrors, solar panels, antimicrobial coatings, batteries, water purification, and automotive applications.
Risks of owning silver?
Peope often underestimate the inherent risks associated with owning silver, gold, platinum, or palladium. These risks encompass price volatility, expenses related to insuring and storing physical metal, geopolitical uncertainties, and the specific risks linked to investment vehicles such as futures or mining stocks. Furthermore, when engaging in transactions involving physical precious metals, one of the most significant concerns arises from dealing with unscrupulous dealers who may impose excessive charges for their services.
Quoted article excerpts are below:
“Gold has traditionally played a more prominent role as a monetary reserve asset held by central banks, giving it a stronger reputation as a store of value and inflation hedge,” says Michael Ashley Schulman, chief investment officer with Running Point Capital Advisors. “Silver, on the other hand, has had a less central role in the international monetary system. The value of silver is more subject to its use and versatility as an industrial metal.”
“Investors may choose to diversify their precious metal holdings by including both gold and silver in their portfolios to mitigate the risks associated with each metal’s unique characteristics, but the effectiveness of silver or any precious metal as an inflation hedge depends on the specific economic conditions and market dynamics at a given time,” Schulman says.
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-23-85