With strategic metals as tangible assets, private buyers can rely on long-term value growth and thus protect themselves against inflation.
7.9 % in August, 10.0 % in September, 10.4 % in October - the persistently high inflation rates in Germany are fuelling fears among many people that they will lose their savings. Assets invested in bank accounts or savings accounts have been subject to creeping devaluation for months. The monetary policy measures of the ECB and the FED, such as Interest rate increases cannot compensate for this: The real interest rate remains negative. Investors nevertheless have options to counteract this and compensate for the loss of purchasing power.
Tesla boss and Germany's finance minister advise tangible assets
In times of high inflation rates and uncertain economic prospects, it can make sense to invest part of your savings in tangible assets. Elon Musk, CEO of Tesla and multi-billionaire, advises in a tweet to favour tangible assets over cash as protection against inflation:
"As a general principle ... it is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high."
German Finance Minister Christian Lindner is also encouraging savers to invest in tangible assets. He comments in a newspaper interview as follows:
"I'm not an investment adviser. But it is clear that tangible assets are better than money in a savings account or in cash when prices are rising."
Tangible assets can be added to the portfolio for diversification. Private buyers who diversify spread their return opportunities across several forms of investment that develop differently under the same market conditions, thus balancing out losses such as in the event of high inflation.
Commodities as a hedge against inflation
To protect savings, the portfolio should therefore include forms of investment whose return or increase in value is higher than inflation rates. This is the case with tangible assets, for example, which include not only property, works of art and company shares in the form of equities, but also precious metals and commodities. The latter two have their own intrinsic value, which never falls completely to zero. Unlike property, private buyers can acquire commodities for a manageable amount. In addition, there is no concentration risk. The German In one of his weekly columns, financial journalist Hermann Kutzer calls commodities "a primal form of tangible assets" and speaks of their renaissance in the investment sector: "Because they are needed everywhere, but at the same time they are becoming scarcer and more expensive." In contrast to cash, they are constantly increasing in value.
The following figures show just how strong this increase in value has been in recent months: The Bloomberg Commodity Index, which tracks various commodity groups such as energy sources, agricultural commodities and industrial metals, has risen by more than 18 per cent since the beginning of the year. The In its monthly reports, the German Mineral Resources Agency for selected metals used to refine steel, predicts an average price increase of 17 per cent for the current year. If the analysis is broken down to the level of individual metals, it becomes even clearer that the increases in value are far higher than the current inflation rates:
- The Rare earth element terbium is of great importance in fuel cell technology. The price increase for the past twelve months totalled 58 %.
- Hafnium, which is one of the technology metals, is used in everything from superalloys to high-performance computer chips and has increased in price by 97 % in one year.
Strategic metals such as indium can be acquired as inflation protection
Access to industrial raw materials for private buyers
Although the example commodities are industrial goods, private customers can also purchase them and speculate on potential returns. The range of industrial metals available for private purchase has become very diverse in recent years. It now includes Technology metals, rare earths and Precious metals incl. platinum group metals. Before investors acquire these as tangible assets, however, they should inform themselves well and buy from reputable suppliers. There are many aspects to consider, from packaging and industrial quality to resale options. Our blog article Buy strategic metals: These seven things to consider describes in detail which details are important.
