In times where all major currencies are continuously losing purchasing power, where the perceived inflation rate is much higher than officially published and where interest rates are below inflation rates, many investors are looking for opportunities to protect and preserve their wealth.
Sure, in the past a good mix of bonds, stocks, real estate and cash had been the answer. But is this strategy still successful today? And can it protect your wealth in the future? If we take a closer look at the global markets, we will find that the yield of AAA bonds is approximately zero, the future of the Euro and the Dollar continues to be highly unpredictable and speculation in established markets like top tier real estate or major stock indices has reached its climax. So, where should investors put their money to diversify risk, maintain wealth and receive solid returns?
A part of the solution could be found in a ‘new’ asset class: Rare Strategic Metals. New because until recently these specialty metals were only accessible to the industry and were solely traded in metric tons. Until today, these metals are not traded on stock exchanges and there is no future or certificate market. However, a handful of companies have begun to offer private and institutional investors access to this market by buying, storing and reselling these metals in lower quantities for their customers.
But what are Rare Strategic Metals and why are they so special?
Metals are considered the mother of all material property. Rare strategic metals in particular are absolutely indispensable to technology and manufacturing today and in the future – which is what gives them their high value. Going mostly unnoticed, few people understand how different our lives would be without these metals. Just try to imagine a world without transportation, computers, cell phones, or even the clothing you are currently wearing, to name just a few examples. National Geographic in June 2011 called them “the secret ingredients of almost everything”, the European Commission and the U.S. Government have already warned several times about the imminent shortages of supply and their critical impact on modern high technology industries.
Already experiencing a rise in prices and supply shortfalls to meet production demands, the continued growth of emerging economic powers such as the BRIC countries is straining the supply of these crucial metals even more. As a result, prices of several rare strategic metals have already risen 50 to 80 percent in recent years.
Market scarcity, supply shortages, and the current turmoil in global financial markets will inevitably cause a further spike in metal prices. History has repeatedly shown that possession of physical metals has led people to prosperity and security over generations. This will not change in the future.
Christian Buescher is Executive Director within the Swiss Metal Group, responsible for developing the Latin American markets.