)
Invest in precious metals and precious metals mining
Valuable takeaways:
- Possesses both industrial and monetary properties
- Are irreplaceable in the manufacturing of technology
- Diversifies risk increase the risk-adjusted return in a portfolio
- Has historically protected against inflation over a long time horizon
- Are finite resources that are expected to become increasingly rare in the future.
Be part of the journey
More than 100,000 investors across Europe have invested in the AuAg funds.
)
)
)
)
What are precious metals?
Precious metals refer to metals that have low reactivity with other substances, i.e., they show great resistance to chemical influence from the surrounding environment. Precious metals generally have a higher melting point than other metals.
The precious metals are:
- Gold
- Silver
- Palladium
- Iridium
- Rhodium
- Ruthenium
How are precious metals used?
Green technology
Silver is a critical precious metal used in manufacturing solar panels and electric cars ー technologies that plays an important role in the green transition. According to Forbes, 141 billion was spent globally on solar energy technology development in 2019.
Platinum and palladium are the active substances in internal combustion engines' catalysts that clean our air. The platinum family metals are also an important component in the production of hydrogen and fuel cells. It will be possible to develop a new generation of emission-free vehicles with hydrogen fuel cells.
The aerospace industry
Silver is an irreplaceable component in jet engines because the metal increases the solidity and strength, making the engines work optimally in high temperatures.
Gold is used in space technology, such as the gold-plated mirrors on NASA's Webb-telescope.
Medical technology industry
Platinum-based metal complexes can be used as a tool in modern medicine to treat various forms of cancer. One example is targeted cancer treatment where cytotoxic nanoparticles of gold, platinum, and iron are used to destroy cancer cells without harming healthy cells.
Gold is also used in the manufacturing of radiation protection.
The automotive industry
Metals in the platinum family, such as platinum and palladium, are used to manufacture catalytic converters for petrol and diesel-powered cars.
Silver is an important part of producing electric cars, as over 50 car parts in a modern electric car require silver. Silver has the best conductivity of electricity and heat and is used, for example, in buttons where you want quick responsiveness and also in the windshield to quickly heat up and melt away frost. Gold is also used in car manufacturing, for example, for circuit boards and connectors.
Communication
Both silver and gold are used in communication technology, such as mobile phones. Silver is also a necessary part of the expansion of the 5G network.
Jewellery manufacturing
In 2021, two-thirds of all available gold was used in the jewellery industry, which has been the case since 2013. In 2021, the jewellery industry was the third largest sector in terms of the usage of available silver. Platinum is also often used for jewellery.
How to invest in precious metals?
- Physical precious metals: You can buy the physical metals, such as gold, silver, platinum, or palladium, and store them at home or in another safe place.
- ETCs (Exchange Traded Commodities): By purchasing an ETC, you own physical precious metals and pay a fee to avoid managing the storage yourself.
- Derivatives: Investment products that track the price of precious metals, but where you face counterparty risk against the issuer of the product.
- Shares: The share price of mining companies that extract precious metals is closely tied to the spot prices of those metals. Due to the additional company-specific risk, mining stocks often fluctuate more than the price of the underlying metal.
- Funds: Investing in a fund means you pay a fee for an expert (fund manager) to choose underlying assets that offer exposure to precious metals.
How much should you invest in precious metals?
Precious metals are always a good consideration when creating a well-diversified investment portfolio. According to Oxford Economics, the optimal share of gold in a portfolio is 5 % in a 50-year market scenario with 2.25 % annual growth and 2 % inflation. This weighting should be higher when, for example, inflation is higher.
Your planned investment horizon and risk profile should determine the share of precious metals in your portfolio. If you are long-term, the time to buy precious metals is less important, as the price has historically increased over longer periods. The price of gold has risen an average of 9.1 % per year since 2000.
What does the future look like for precious metals?
The future of platinum
The price of platinum is expected to rise due to increasing demand from the automotive industry, medical technology, and the jewellery industry, despite potential challenges from the rise of electric vehicles, which reduce the need for traditional catalysers. With stricter emission standards in Europe and China, as well as global supply disruptions, including a semiconductor shortage, the need for platinum remains strong. Meanwhile, future growth in hydrogen technology, where platinum is used in fuel cells and the production of eco-friendly hydrogen, could further strengthen the market. However, the market is influenced by geographic shifts in demand, where decreased demand for diesel cars in Europe could potentially be offset by increased needs from the truck market in the USA and China.
The future of silver
Silver is one of the most used commodities in the world in terms of the number of uses. The Silver Institute predicts that the use of silver will increase by 10 percent by 2025 due to its importance in future technologies. Silver is also believed to become increasingly rarer and more valuable due to the limited supply, which can make a silver investment a profitable business. While the demand for silver is predicted to increase, depending on whether future technological solutions, such as solar panels, will become more efficient and able to replace silver with other alternatives or use less silver, it may instead decrease.
The future of gold
Gold is likely to continue as a central asset in global economies, with steady demand from investors and the technology sector. The price of gold is expected to increase over the next decade due to factors including inflation, as central banks around the world expand the money supply and its relationship to the US dollar, as well as uncertainty and geopolitical conflicts.
Why invest in precious metals funds with AuAg?
- All AuAg funds are classified as Article 8 according to sustainability criteria.
- AuAg strategically utilises data from Sustainalytics, Sanctify and Datia, to enable a well-founded analysis of companies' sustainability efforts.
- AuAg's funds fit well into a portfolio of traditional assets as they have a low correlation with stocks in particular.
- AuAg Funds offer both daily traded and exchange-traded funds. Common to these is that they focus on companies that extract gold and other precious metals.
Yes. Precious metals have unique properties that make them irreplaceable in various areas. Silver is an important component in many products that play a decisive part in the green transition, such as solar panels and electric cars. Moreover, silver is an essential metal for expanding the 5G network and for radio-frequency identification, RFID.
