Build Your Knowledge:

How bullion works as a financial asset

Bullion is considered a legal tender. While you’re not likely able (or
would want) to use it to pay for your groceries at your local big box
store, some people indeed incorporate bullion in their personal
trading. Thanks to its liquidity, Canadians can fairly easily purchase
and sell bullion. But its greatest value is realized when it’s used as
part of an individual’s larger financial planning. There are three
main reasons behind acquiring bullion with a long-term view:

• It acts as a hedge against inflation: The
  aesthetic attraction of diamonds is nearly universal. For decades,
  red carpets have featured stunning examples of beautifully crafted
  earrings, necklaces, rings, and bracelets featuring rare coloured
  diamonds. These brilliant pieces often draw just as much attention
  as the celebrity wearing them.
• It adds diversification to your overall financial picture:
  Physical precious metals are largely unimpacted by the activities of
  the stock market, which make it an asset unlike others. In addition
  to this, gold is often negatively correlated to the dollar – meaning
  that it performs well even when the dollar is not. By including
  physical platinum, gold, or silver among a mix of other investments,
  an investor can potentially reduce the overall risk in their
  portfolio.
• It can act as a safe haven asset: Bullion
  products can potentially retain their value during times of market
  volatility or economic and political uncertainty. In fact, some
  people value bullion even more at these times, and use it as a way
  to protect their financial security and wealth.

What influences the market price of platinum, gold, and silver

Precious metals are measured by weight – specifically troy ounces. The
price you pay in paper currency for precious metals is impacted by
several different factors:

• Supply and demand: Like any commodity,
  the price of platinum, gold, and silver is largely determined by
  basic supply and demand market dynamics. Factors like increased
  industrial usage and changes to mining operations can make a
  difference in the price commanded by precious metals.
• Interest rates: Precious metals, and
  particularly gold, are often seen as an alternative to investments
  like bonds and other fixed-income financial products. When interest
  rates fall, the appeal of gold as an investment often increases. On
  the other hand, when interest rates rise – often to combat inflation
  – that can also trigger a demand for gold.
• Economic, market, and political uncertainty:
  Because bullion is frequently seen as a safe haven asset, demand
  (and the price) for it can increase, when economic, political and
  market uncertainty grow. In fact, geopolitical stress often grows as
  a result of government-level financial mishandlings or distortions,
  which even furthers the appeal of gold.
• Currency fluctuations: Precious metals
  are typically priced in US dollars, so fluctuations in the value of
  the US dollar can impact the price. If the value of the US dollar
  sinks, the price of platinum, gold, and silver may rise. That said,
  the gold you own remains steady and maintains its purchasing power
  regardless of the volatility of a currency it’s being compared to.
  To paraphrase market analyst Bill Holter,
  “If the dollar is worthless, then gold becomes priceless.”
• Specifics to the bullion product: As
  you’ll read below, the bars and coins available on the market have
  different perceived and actual values, which impact the individual
  price you might pay.

Why some bars of bullion are valued more than others

In addition to the current market price of precious metals, bullion
products can differ from product to product. Here are the main factors
that impact the price and value of different bullion:

• Weight: Larger bars (in terms of weight)
  are generally more valuable than smaller bars. The price per ounce
  is determined by the current market price of that precious metal.
• Purity: The purity of a bullion product
  is listed in a percentage form, with 99.9% being the greatest level
  of purity available. Gold can also be measured in karats, with 24
  karats being the purest (99.9%) form of gold. The higher purity, the
  more valuable the bullion is.
• Certification: Bullion bars and coins
  that are certified by a reputable organization, such as the London
  Bullion Market Association (LBMA), will have a higher value.
  Guildhall only brokers LBMA-certified bullion.
• Brand: Some brands of bullion bars are
  more recognized than others, and this can impact their value. Some
  of the most well-known brands include PAMP Suisse, Valcambi, Nadir,
  and Asahi.
• Rarity: Some bullion products may be
  rarer than others, due to limited production or other factors, and
  this can impact their value.
• Condition: While a few nicks, scratches,
  and a bit of tarnish on a bullion bar is normal, when it’s time to
  sell, you’ll want to present your products as beautifully as
  possible. We always recommend that clients keep their bullion in its
  original packaging (when available) and to make sure their products
  are properly cleaned. This is one reason why it may be worth
  exploring
  safe and secure storage
  options for your bullion.

Because the choices are nearly endless, Guildhall provides our clients
with a smartly curated collection of dependable bullion products that
span different budgets. Learn more about how you can make a purchase
with Guildhall by visiting the
Kickstart section
of
The Guildhall Strategies.

How platinum, gold, and silver differ from each other

The concepts and strategy behind acquiring platinum, gold, and silver
bullion products are largely the same. That said, there are some
meaningful differences between these precious metals that are worth
exploring.

• Rarity: Of the three precious metals we
  carry, the above-ground supply of platinum is the rarest, followed
  by silver, and then gold. The cost of mining and refining platinum
  is also higher – and while platinum is found in several pockets of
  the world, the greatest deposit and supplier of platinum is
  overwhelmingly in one spot: South Africa. All of these factors drive
  the price of platinum up. That said, gold is the only precious metal
  that is yellow, which makes it stand out from the rest and gives it
  extra value.
• Industrial uses: Platinum and silver have
  more industrial applications than gold, which can impact their
  supply and demand dynamics and, in turn, their prices. For example:
• Platinum is used in catalytic converters for
  automobiles. This is because platinum has a special quality whereby
  it can accelerate or trigger a chemical process without its
  structure permanently changing or getting used.
  Silver is used in a wide and ever-growing range of
  electronic and industrial applications, including photovoltaic
  cells, which are critical in generating solar power.
  While gold also is utilized in different
  technologies, its top usages are the creation of jewelry (in large
  part thanks to its malleability), and as backing in financial
  systems.
• Cultural perceptions: Even though silver
  is actually rarer than gold, societies have long viewed gold as the
  more scarce, luxurious, or valued metal. This is most evident in
  things like the order of the Olympic medals and language such as
  “gold star” or “gold standard”. This perpetuates the perception that
  gold is the more valuable of the two metals.
• Historical recognition and performance:
  Gold coins have been a long-recognized form of currency in societies
  around the world. More recently, gold has proven it can maintain its
  value, even during economic downturns and periods of inflation. This
  reputation has positioned gold as an attractive investment for many
  people.

For these reasons and more, several clients who purchase precious
metals opt to buy all three types to enhance the diversity of their
portfolio. At Guildhall, we’re happy to speak with you, in-person,
over the phone, or on a video call to discuss what bullion is best for
you. Reach out to us to get started.