A bull market for those investing in gold and silver has been a fact of life for quite some time now, but stocks are much more vulnerable to changes in the world's economy.
One of those changes, according to a recent report by Bruno J. Navarro of CNBC, is a bear market that is predicted to begin in China which could have a strong negative effect on the US stock market. This could mean the time is now to add more precious metals investments to your portfolio.
Analysts often advise that investors buy gold, silver or platinum when economic uncertainty looms on the horizon, and a bear market in China is definitely the kind of destabilizing global economic threat that many analysts say would warrant such a move. Many traders are being told in Australia to look for the signs of this shift because the Australian market is closely tied to China's market.
If China's economy undergoes the kind of slowdown that many are predicting it will, those investing today in gold and silver will not need to worry so much about the performance of US stocks. Precious metals investments are well known for their ability to protect one's portfolio. This is the same course that the central banks of European countries are taking: adding gold as a way to lower their risks.
The CNBC article quoted Drakon Capital's Guy Adami as making a statement that seemed to encourage his audience to buy gold,
"I think buying protection makes all the sense in the world, as does paring down some equity positions."
If a down market arrives as predicted, not only in China but in closely linked Australia, it is almost certain that the effects will be felt in the US.
Long-term investors understand these trends are natural. This is why they so often choose to add precious metals to their portfolios, diversifying and stabilizing them before the down cycle begins. The particular issue with China is that it is such a massive economy, due to its position as the world's most populous country that any changes it experiences are likely to have effects which ripple across the globe.
The value of a long-term investing strategy is that investors need not be rocked by temporary changes in the 'economic atmosphere' and can ride out storms. Gold and silver both have a several thousand year histories of value and, analysts have discovered, a tendency to rise in value when stocks either flatline or drop significantly in value. Some even argue that the worse an economy gets, the more gold and silver assets will be valued.
While no one can tell any individual investor what the future will be or how they should handle their portfolios, it seems clear that China's incredible surge in economic growth must eventually come to an end and that one way to guard against the effects of that is to hold hard assets such as precious metals.
The good news is, even if none of that comes to pass, gold and silver, along with platinum, will continue to be commodities worth holding onto because they are so widely used in a large number of industries around the world.