Owning physical precious metals can help mitigate counterparty risk because it involves the ownership of a tangible asset that is not dependent on the financial system or the creditworthiness of a particular counterparty. In other words, owning physical precious metals means that an investor has direct ownership of the asset and is not dependent on the ability of another party to fulfill its obligations. It’s not a piece of paper that say you own 100 ounces of silver its actually 100 ounces of silver. You own it, you possess it, you can hide it, you can give it to others, and you can sell or trade it.
However, there are still some risks associated with owning physical precious metals, such as the risk of theft or damage to the asset. Investors must take steps to ensure the safe storage and protection of their physical precious metals, which may involve additional costs for secure storage facilities, insurance, and other related expenses.
In addition, trading in physical precious metals can also involve counterparty risk when engaging with dealers or other parties involved in the buying and selling process. It’s important to carefully consider the reputation and reliability of any dealer or counterparty before entering any transaction involving precious metals. An example of this is if you find some random person on Facebook or Instagram and you send them a bunch of money for bullion but get nothing in return. This is one of the reasons we exist as we want to help educate those with interest on preserving wealth not blowing it on scam artists.
Overall, while owning physical precious metals can help mitigate counterparty risk, it’s important for investors to carefully consider all risks and potential costs associated with investing in this asset class before making any investment decisions. Common sense is important when buying bullion, if a deal seems to good to be true, someone selling way below spot price or other reputable sites is likely not going to deliver what your expecting or in many cases anything at all.