Precious metals as a security strategy to minimize corporate risks

The global economy is in a state of permanent uncertainty. Political tensions, rising inflation rates and volatile currencies are presenting companies worldwide with ever greater challenges. In this unstable environment, precious metals such as gold, silver and platinum are gaining in importance. They are seen as an indispensable hedge that enables companies to minimize risks and ensure long-term stability.

Precious metals are characterized by unique properties that make them one of the most stable financial instruments. Gold, for example, has been valued for thousands of years - not only as a medium of exchange, but also as a store of value. While fiat currencies have repeatedly lost value throughout history, gold has always retained its real value or even increased it. Historical crises - from the Great Depression of the 1930s to recent geopolitical conflicts - have shown that precious metals can remain stable or increase in value in uncertain times.

Companies benefit from these properties in a special way. They can use precious metals as a strategic financial instrument to hedge their assets. In times when currencies fluctuate and markets are unpredictable, precious metals offer a solid foundation. Their limited availability and global acceptance make them a secure reserve that will last regardless of political or economic developments.

In addition to stability, diversification also plays a central role. By integrating precious metals into the corporate balance sheet, companies can reduce their dependency on currencies and capital markets. This diversification not only offers protection against short-term market fluctuations, but also strengthens a company's long-term financial position.

While many companies continue to rely on traditional hedging instruments such as bonds or foreign currency reserves, others have long since taken action. They are integrating precious metals as an integral part of their risk management strategy. This trend is particularly evident in times of crisis, when precious metals increase in value and prove their function as a reliable reserve.

For companies, this means not only security, but also the opportunity to act actively in an uncertain environment. Precious metals offer a double opportunity: they not only protect against risks, but also open up potential for value appreciation. Companies that adopt this strategy at an early stage create a basis that secures their present and strengthens their future.

The history of mankind is closely linked to precious metals. For thousands of years, gold, silver and platinum have been synonymous with wealth, power and stability. However, their true strength is particularly evident in times of crisis - when other assets lose value and precious metals prove to be a reliable anchor. A look at key crises of the past 100 years illustrates why precious metals are indispensable in turbulent phases.

After the First World War, Germany experienced one of the most extreme periods of inflation in history. The Weimar Republic struggled with massive reparations payments, economic instability and runaway inflation. Between 1921 and 1923, the German mark lost almost all of its value. Bread prices rose from a few marks to billions and savings became worthless overnight.

In these chaotic times, gold proved to be a lifesaver for those who had bet on it in time. While paper money was rapidly devalued, gold retained its real value. Many Germans exchanged their remaining assets for gold or gold coins in order to preserve their purchasing power. This crisis made it clear worldwide that precious metals have a decisive advantage over fiat currencies: They are resistant to inflation and independent of political decisions.

The Great Depression of the 1930s caused global economies to falter. After the stock market crash of 1929, shares fell dramatically in value, banks failed and the unemployment rate rose to record highs worldwide. While many assets - from real estate to currencies - lost their purchasing power, gold remained stable.

At that time, the gold standard was still in force in many countries. Central banks could not print unlimited amounts of money, which meant that gold retained its function as a store of value. For companies and private investors, it became an indispensable instrument for asset protection. The price of gold remained relatively constant, while other investments suffered enormous losses.

The oil crises of 1973 and 1979 led to a global energy shortage and a dramatic increase in oil prices. The result was a worldwide wave of inflation, which led to double-digit inflation rates in many industrialized countries. Fiat currencies such as the US dollar and the Deutschmark lost considerable purchasing power.

Gold, on the other hand, experienced an unprecedented price increase. Between 1971, when the gold standard ended, and 1980, the price rose from USD 35 to over USD 800 per ounce. Gold acted as a hedge against inflation and secured both assets and purchasing power. For companies and countries that had backed precious metals early on, this crisis was proof of the value of gold in times of economic uncertainty.

The Asian crisis of 1997: Gold as a stable reserve

The financial crisis that began in Asia in 1997 shook the currencies and economies of several countries. Countries such as Thailand, Indonesia and South Korea suffered massive devaluations of their currencies and the markets quickly lost confidence. During this time, demand for gold as a stable store of value increased significantly, particularly in Asian countries.

Gold offered investors protection against the massive currency devaluations and once again proved to be an independent and stable asset. Especially in countries with severely weakened economies, gold became a sought-after reserve that guaranteed purchasing power and facilitated access to international trade.

After the dot-com bubble burst, the global economy experienced a significant decline in the stock markets, which was particularly evident in the technology sector. Companies and investors who had invested in internet companies were faced with enormous losses.

Gold also showed remarkable stability during this phase. Although the crisis primarily affected equities and not the economy as a whole, many investors recognized the need to hedge their portfolio with precious metals. Demand for gold as a safe investment increased, underlining its importance as a long-term hedge.

The global financial crisis of 2008 marked a turning point in the modern economy. The collapse of major banks such as Lehman Brothers and the dramatic slump on the stock markets led to panic on the financial markets. Investors sought safety and gold became the preferred asset class.

Within a few months, the price of gold rose from around USD 700 to over USD 1,000 per troy ounce. For investors, gold was one of the few asset classes that not only retained its value during this period, but also grew. Governments used gold reserves to stabilize currencies and private investors increased their holdings.

The COVID-19 pandemic presented the global economy with unprecedented challenges. Production chains collapsed, national debt rose and massive monetary policy measures led to inflation concerns. In the midst of these uncertainties, gold experienced a record rise. In August 2020, the price of gold reached an all-time high of over USD 2,000 per troy ounce.

During this phase, gold was not only a safe investment, but also a preferred means of diversifying portfolios. Companies and investors increasingly turned to the precious metal to hedge against the uncertainties of the pandemic and the resulting economic consequences.

Safe assets in uncertain times: Precious metals as a corporate strategy

Historical observation has shown that precious metals offer a reliable hedge in times of crisis. Companies can make extensive use of this potential in practice. The use of gold and other precious metals goes far beyond protection against losses in value - they are increasingly becoming a central component of modern corporate strategies.

Securing equity capital

Equity is the financial basis of every company. It not only determines creditworthiness and investment capacity, but also protects the company against insolvency and market distortions. Precious metals can help to secure equity. It creates a stable reserve that is independent of economic fluctuations or market risks. Unlike other asset classes, which are strongly influenced by economic developments, precious metals retain their value even in uncertain times. This makes them a reliable instrument for preventing equity losses. They offer a hedge against market volatility and unforeseen events that could have a negative impact on other assets.

Hedging liquidity

Liquidity is essential to maintain a company's operations. In difficult economic times or during unexpected crises, access to short-term funds can be crucial. Precious metals offer a decisive advantage here: they are liquid and can be quickly converted into cash without suffering drastic losses in value. Companies that use precious metals as part of their liquidity strategy create a reserve that is immediately available when needed. This allows them to meet unforeseen obligations or take advantage of short-term opportunities without jeopardizing operations or other assets.

Strategic reserves are an essential part of any long-term corporate planning. They not only serve to balance out economic fluctuations, but also create a basis for investment in the future. Precious metals are ideal for building up such reserves, as they offer a stable value and are not affected by inflation or currency risks in the long term. By integrating precious metals into strategic reserves, companies secure their financial stability. These reserves can also help to increase resilience to external shocks and improve long-term planning security.

A well-diversified corporate reserve is the key to minimizing risk. Precious metals offer a valuable addition in this context, as they have a low correlation to other asset classes such as equities, bonds or real estate. This shows that their value remains independent of fluctuations in other markets. By integrating precious metals into their reserve portfolios, companies reduce the overall risk of their assets. This diversification not only protects against specific market risks, but also strengthens the company's financial resilience.

Precious metals increase the attractiveness of companies in the event of a merger or takeover, as this sends a strong signal to potential investors or buyers. Precious metal reserves stand for stability and value retention - qualities that are particularly valued in uncertain economic times. Precious metals strengthen the financial basis of companies, which creates confidence and has a positive influence on the valuation in the event of a takeover. Precious metals are liquid, stable in value and independent of currency risks, which makes them a valuable asset. On the other hand, a precious metal strategy strengthens the stability and security of companies, as they are less susceptible to economic shocks or targeted market manipulation. The independent value stability of precious metals ensures that companies remain financially stable even in turbulent phases. This stability protects against hostile takeovers, as potential attackers are hardly in a position to exploit economic weaknesses or deliberately reduce the value of the company.

International business is often associated with currency risks. Exchange rate fluctuations can reduce profits or make contracts unprofitable. In this context, precious metals act as a stable anchor of value that remains independent of currency developments. By incorporating precious metals into international business strategies, companies can minimize their risks and increase the predictability of their cash flows. This hedging not only offers protection against short-term fluctuations, but also strengthens long-term stability in global markets.

Companies that use precious metals directly or indirectly in their production are often affected by price fluctuations. Precious metals can serve as a hedge against volatile commodity prices for these companies and increase the predictability of their cost structure. This hedging enables companies to protect their margins and create a stable basis for long-term business decisions. This is particularly relevant in industries that are heavily dependent on commodity markets.

In addition to hedging against commodity price changes, precious metal producing companies can build up strategic inventories to minimize supply chain risk. By securing precious metal inventories, they protect themselves against supply bottlenecks that can be caused by geopolitical or economic uncertainties. This strategy increases the reliability of production chains and strengthens the competitiveness of companies. It makes it possible to secure the supply of essential raw materials regardless of external influences.

Systemic risks such as the collapse of banks or global financial crises can threaten the economic stability of a company. Precious metals offer an opportunity to mitigate such risks, as they are independent of financial systems or institutional structures. By using precious metals, companies create a crisis resistance that protects them from the effects of systemic collapses. This helps to ensure the continuity of business activities even in extreme situations.

Precious metals can help to ensure the distribution of dividends even in difficult economic times. They create a financial basis that is independent of market fluctuations or economic cycles. By holding precious metals, companies can ensure the stability of their dividend policy and at the same time strengthen the confidence of shareholders and investors. This contributes to the long-term attractiveness of the company.

The integration of precious metals in companies requires strategic planning that is geared towards the specific requirements and objectives of the company. Choosing the right form of hedging - whether physical or paper-based - is crucial in order to derive the greatest possible benefit from a precious metals strategy.

The acquisition of physical precious metals is the most traditional and safest method of hedging company assets in the long term. Bars and coins are among the preferred forms, as they are immediately tangible and give companies full control over their assets. This physical form offers independence from financial institutions and market dynamics, as precious metals are not exposed to counterparty risk or systemic collapse. They remain stable and retain their value even in times of political or economic uncertainty. However, storing physical precious metals requires careful planning and professional security measures. Companies can either store their stocks in in-house vaults or use specialist service providers who specialize in the secure storage of precious metals. While in-house storage offers maximum control over assets, external providers ensure access to highly secure storage facilities and insurance against potential loss or damage. This combination of direct ownership and flexible liquidation makes physical precious metals particularly attractive for companies seeking long-term security and a stable foundation for their strategic reserves.

Paper-based precious metal investments are a modern and flexible alternative to physical storage. Companies can invest in exchange-traded funds (ETFs), certificates, futures or other derivative financial instruments that track the value of precious metals. This form of integration offers the advantage that companies do not have to take storage costs or security precautions into account, as the value is held in the form of a financial instrument. A particular advantage of paper-based products is their high liquidity. They can be traded on exchanges and allow companies to adapt their precious metal strategy quickly and flexibly to market changes. This makes them ideal for short-term hedging solutions or for diversifying portfolios. However, companies should consider the specific risks of this form of investment, for example potential counterparty risks or the impact of market fluctuations on the value of the products. Paper-based precious metal investments are particularly suitable for companies that pursue a dynamic and easily adaptable strategy and wish to benefit from the short-term advantages of precious metals.

A combination of physical and paper-based precious metals represents a balanced strategy that combines the advantages of both approaches. Companies can achieve both long-term security and short-term flexibility with this hybrid approach. Physical precious metals serve as a stable basis for hedging assets, while paper-based products offer flexibility and can be liquidated quickly. Such a model allows companies to hold long-term reserves in gold or silver in the form of bars or coins, which act as strategic reserves and remain stable regardless of market fluctuations. At the same time, futures, ETFs or certificates can be used to react to short-term market movements or to hedge specific risks. This mixed strategy creates a solid basis for the long-term stability of a company and allows it to react flexibly to economic changes at the same time.

Tokenized precious metals are an innovative and future-oriented way of integrating precious metals into corporate strategies. In this approach, physical precious metal - usually gold or silver - is represented by digital tokens on a blockchain. Each token represents a specific quantity of the physical precious metal, which is stored by a trusted provider. This approach combines the stability of physical precious metals with the advantages of the digital world. Companies can easily acquire, trade and integrate precious metal tokens into their balance sheet without having to deal with the physical challenges of storage and security. As blockchain technology offers complete transparency and traceability, companies know at all times that their digital assets are backed by real precious metals. Tokenized precious metals also allow for improved liquidity. Tokens can be traded in real time, giving companies flexibility when they need to react to market changes. Another advantage is the ability to invest small amounts in precious metals, which makes this approach particularly attractive for medium-sized companies. In addition, transaction costs are reduced compared to traditional approaches, as no physical transfers or security measures are required.

Working with mining companies is a direct and often cost-effective method of integrating precious metals into corporate strategies. Through such partnerships, companies secure long-term access to precious metal reserves and benefit from stable conditions. A frequently used model is the conclusion of purchase agreements. The company undertakes to purchase a certain quantity of precious metals at a predetermined price. This agreement protects against price fluctuations and offers planning security. This is particularly evident in industries that require precious metals for their production, such as the electronics sector or the automotive industry. In addition, partnerships with mining companies allow greater control over the origin of the precious metals. Companies can thus ensure that the raw materials come from sustainable and ethically sound sources. In addition to purchase agreements, mining companies often also offer investment models in which companies can acquire direct stakes in mining projects. In this way, companies not only secure access to precious metals, but also benefit from potential increases in the value of the mining operations. These strategic partnerships offer companies deeper integration into the precious metals value chain and open up new opportunities to reduce costs and minimize risks.

Precious metal savings plans offer companies a gradual and sustainable way to build up precious metal reserves. Instead of making a large one-off investment, a certain amount is regularly invested in precious metals over a fixed period of time. This allows companies to expand their strategic reserves in a predictable manner and without high initial costs. A key advantage of savings plans is that they smooth out market prices. As precious metals are purchased at regular intervals, companies benefit from the so-called average cost effect (cost averaging). This means that precious metals are purchased at different market prices, which minimizes the risk of investing large sums at an unfavourable time. Precious metal savings plans can be implemented both in physical form and in digitalized form. With physical savings plans, the precious metals purchased are stored securely - either with specialized service providers or in the company's own vault. Digital savings plans, on the other hand, invest in tokenized precious metals or paper-based products such as ETFs, which eliminates storage costs and increases flexibility. This approach is particularly suitable for small and medium-sized companies that want to strategically integrate precious metals into their financial planning without having to tie up large sums of capital. Precious metal savings plans also offer transparency and predictability, as investments can be regularly documented and monitored.

Precious metals not only offer companies security in uncertain times, but also concrete advantages that strengthen their financial stability and competitiveness. From hedging against losses in value to optimizing the balance sheet structure, precious metals are a versatile instrument that has a positive impact on various aspects of corporate management.

One of the key benefits of precious metals is their ability to stabilize and strengthen a company's balance sheet. Physical precious metals can be recognized as long-term reserves that are not affected by the fluctuations of the financial markets. These reserves create a stable foundation that increases the confidence of investors and business partners. At the same time, paper-based precious metal products such as ETFs or certificates can be carried on the balance sheet as financial instruments to ensure a diversified asset structure. The clear allocation of precious metals enables transparent reporting and helps to present the company's financial position clearly and reliably.

Another advantage of precious metals is their function as a hedge against inflation. While fiat currencies can lose purchasing power, precious metals retain their real value. This property not only protects a company's reserves, but also its long-term investment plans from erosion through inflation. By integrating precious metals into their financial strategy, companies hedge their assets and protect themselves from the devaluation of traditional currency reserves. In addition, precious metals offer companies the opportunity to strengthen their financial independence. Unlike other asset classes, precious metals are not dependent on institutional or market influences. This independence makes them an ideal addition for companies that want to stabilize their reserves and remain flexible at the same time.

Another key advantage is the universal acceptance of precious metals. Gold, silver and platinum are regarded worldwide as having a stable value, which makes them an attractive reserve for international business relationships. Companies that integrate precious metals into their financial strategy are less susceptible to currency fluctuations and geopolitical risks, as precious metals are independent of national or regional economies. In addition to the purely financial benefits, precious metals also strengthen a company's reputation. A precious metal strategy signals stability and forward-looking management - qualities that are valued by both investors and business partners. Companies that hold precious metals position themselves as reliable players that focus not only on short-term profits but also on long-term security.

The integration of precious metals into corporate strategies has many advantages, but also specific risks that need to be taken into account. With the right planning and appropriate measures, companies can successfully overcome these challenges and get the maximum benefit from their precious metal investments.

Precious metal prices are subject to strong fluctuations, which are influenced by supply and demand, geopolitical events or macroeconomic factors such as interest rate policy. This volatility can cause the value of precious metal investments to fall in the short term, which is particularly problematic if the company is dependent on these reserves. A proven method of limiting price risks is diversification. Companies can invest not only in gold, but also in other precious metals such as silver or platinum, which often have different price trends. In addition, hedging precious metal positions through the use of futures or options can help to minimize losses in the event of price falls. A long-term perspective on precious metals, which ignores short-term fluctuations, can also relativize the risk.

Physical precious metals offer security, but are less liquid than paper-based products. Companies may have difficulty converting their physical holdings into cash quickly when short-term liquidity is needed. A balance between physical and paper-based precious metals applications can help mitigate this risk. While physical holdings act as long-term reserves, paper-based products such as ETFs or precious metal accounts can be used to cover short-term liquidity needs. A clear plan for the use and liquidation of physical reserves should also be established to ensure timely availability.

The physical storage of precious metals is associated with costs. These include security precautions, insurance and the purchase or rental of vaults. These costs can reduce the return on investment, which is particularly evident with smaller holdings. Companies should carefully consider the cost-benefit ratio of physical storage. Working with specialist service providers who offer cost-effective storage solutions can reduce the burden. Alternatively, companies could consider paper-based products or tokenized precious metals, which do not incur physical storage costs.

Precious metals are global commodities whose prices and availability depend on international markets. Political or economic instability in key producing countries can limit availability or drive up prices. One way to reduce dependence on global markets is to establish strategic partnerships with mining companies. Such purchase agreements secure companies stable conditions and long-term access to precious metals. In addition, precious metal savings plans can help to balance out the volatility of global markets by investing regularly.

Paper-based precious metal products such as ETFs or futures are associated with specific risks. Counterparty risks - such as the insolvency of a provider - can mean that the values are not fully covered. Such products are also more susceptible to short-term market fluctuations. Companies should only purchase paper-based products from trustworthy and established providers. Choosing products that are fully backed by physical precious metals reduces the risk. In addition, companies should clearly define the holding period of such products to avoid being surprised by short-term fluctuations.

A common challenge when integrating precious metals is the correct weighting in the company portfolio. Underinvestment will not have sufficient impact, while overweighting can jeopardize the company's diversification and flexibility. A regular review of the portfolio structure is crucial to ensure the optimal allocation of precious metals. Companies should define clear guidelines for the proportion of precious metals in their assets based on their individual risk profile and strategic objectives.

The tax treatment and accounting of precious metals can be complex and varies depending on the form of investment and regional regulations. This complexity can lead to unexpected costs or legal risks if the strategy is not carefully planned. Companies should carefully review the tax and accounting framework before integrating precious metals. Working with tax advisors and accounting experts will ensure that the strategy is implemented efficiently and in compliance with the law.

Precious metals have been a proven means of safeguarding assets for centuries. The limited supply and high demand guarantee long-term value retention. Unlike currencies, precious metals do not lose purchasing power. They remain stable even in times of crisis and offer companies a secure foundation.

Physical precious metals create lasting security without being dependent on third parties. Paper-based or digital forms offer flexibility and enable quick access. Both approaches can be individually combined to meet a company's requirements. In addition to these traditional methods, newer approaches offer additional flexibility. Tokenized precious metals provide digital access to physical holdings with high liquidity and transparency. Partnerships with mining companies ensure long-term access to raw materials and create planning security. Precious metal savings plans offer a sustainable way to build up reserves gradually and cost-effectively.

Both conventional and innovative approaches open up new opportunities for companies to integrate precious metals into their strategies. They not only offer protection against short-term fluctuations, but also strengthen the financial position in the long term. Companies that rely on precious metals today create a stable basis for future challenges.