High interest rates, a stagnating economy and political crises: this makes investors uneasy and puts pressure on traditional currencies such as the euro. Over the years, decades and centuries, many precious metals have proven to be much more crisis-proof.
Silver, platinum or gold have always been popular as jewelry for ears, necks or ring fingers. But precious metals such as these classics and more exotic high-flyers such as osmium are also becoming increasingly important and valuable as tangible assets. Some, such as gold, are already considered “shadow currencies”. Central banks from all over the world are hoarding precious metals – and thereby indirectly securing the value of Paper currencies The German Bundesbank, for example, hoards the second largest gold treasure in the world after the US Federal Reserve Bank – some may remember the James Bond classic “Goldfinger”, in which the gold reserves of the United States were plundered by the film villain Gert Fröbe.
Gold with the role as a safety anchor in the portfolio
“The precious metal gold traditionally fulfils the role of a long-term security anchor in the portfolio. This role is more important than ever in view of the ever newer and more pronounced capriols of the financial system,” says Ronny Wagnergold expert, financial coach and owner of the precious metals dealer Noble Metal Factory.
Today, the major central banks around the world are hoarding huge reserves of gold. Until the early 1970s, the US dollar was even “backed by gold”, which gave it its status as the world’s reserve currency. To finance the American war in Vietnam replaced US President Richard Nixon’s gold connection – exchanging US dollars for gold was no longer possible from 1971 onwards, and with it the gold-dollar standard introduced in 1944 at the Bretton Woods Conference became history. “Since then, the dollar has no real value. That is why the US currency, like all other current currencies, can be increased at will and is subject to an inevitable spiral of devaluation,” explains gold expert Ronny Wagner.
The price of gold or: Up, up and away
The two parts of the formerly iron bond between dollar and gold have fared differently well after the separation. The US dollar has lost a massive amount of value over the years and decades – due to inflation. Gold, on the other hand, with fluctuations, setbacks and sideways phases, only knows one permanent trend: upwards. Ronny Wagner: “On the London gold market, where the global reference price for gold has been negotiated since 1919, a troy ounce of gold cost $38.91 on the day of Richard Nixon’s announcement. Exactly 50 years later, on April 15, 2021, the price was $1,757.20. That corresponds to an annual price increase in dollars of 7.92 percent or a total return for investors in dollars of 4,416.71 percent.” Today, gold is trading well above the 2,000 mark in US dollars and euros. Ronny Wagner explains the reason for the sustained upward trend: “Gold is fundamentally different from other assets, whether stocks, real estate or bonds. The yellow precious metal not only has a value (in dollars, euros, etc.), but gold itself is a value that has been recognized worldwide and for thousands of years.” What also helps to preserve its value is that the global supply of gold is limited – unlike a paper currency, for example, which can theoretically be reproduced at will by the central bank. The entire amount of gold mined in the world to date, pressed together and stacked in the form of bars, would make a cube with an edge length of barely more than 20 meters.
Silver in the shadows, osmium in the fast lane
Scarcity and rarity – that is what has fascinated people about precious metals for thousands of years. The history of precious metals goes back to the 6th century BC. Gold and silver were the most commonly used precious metals for coins among the ancient Egyptians, Greeks and Romans. The Crusades in the Middle Ages – an early form of very militant globalization – increased the importance of gold as a currency and means of payment even further. Later, silver and gold from the newly discovered colonies in South America and later Africa followed to Europe.
Unlike gold, however, silver has never achieved the status of a substitute currency. The reason for this is obvious: silver deposits are much more numerous and the precious metal is much easier to get to light.
Much rarer than gold, however, is another precious metal that is still largely unknown: osmium. It is the rarest precious metal in the world. It was only discovered around 200 years ago and has since been used in a few industrial applications. For a decade now, osmium has been used to an increasing extent in the jewelry industry and is valued as a tangible asset.
Ingo Wolf, Expert from the German Osmium Institute: “The resentment towards osmium has disappeared. It took a 10-year publicity phase to anchor osmium in people’s minds. Today, it has not only arrived on the fixed asset market, but many jewelers prefer to use it rather than diamonds, which are rapidly falling in value. Not least because of its extreme reflective properties, it has become so well known so quickly. The number one driver, however, is and remains its absolute unforgeability.” Osmium offers clear advantages compared to many other precious metals: It cannot be forged and supplies are very limited. This scarcity drives up the price and makes it interesting for investors. The world market has effectively been wiped out. In other words: There is no new raw osmium, at least not from ethically acceptable sources. Around 300 kilograms of raw osmium are still stored in the secure vaults of the Osmium Institute on Lake Staffelsee. This amount will be crystallized in the coming years – then it will be over. Demand for osmium already exceeds supply. Marcos Saito, current president of the Osmium World Council in São Paulo, expects price increases of up to 120 percent by the end of the crystallization phase at the end of 2026. After that, the secondary market for osmium, where already crystallized goods change hands, is likely to take off.
Quantity limitations, value stability and the prospect of rising prices – these are the things gold and osmium have in common and are far ahead of many leading currencies.
24.07.2024