By adding gold and/or silver to your portfolio, you'd be reducing your exposure to paper money volatility. Moreover, the fundamentals for these precious metals are strong. Granted, they have not been performing well in recent times. But the indicators we have say the future of these metals will be good.
For instance, in a recent report from the World Gold Council, China accounted for 26% of the global private-sector gold demand in 2013 thanks to low gold prices.
The report also contains a Chinese consumer survey, which says that 60% of Chinese gold consumers expect the price of gold to increase over the next 12 months. This means that we might see more gold going toward the east over the next 12 months. The increasing demand for gold in China suggests that gold is currently undervalued - which is evident in the slow economic growth we are seeing.
In addition, the rapid growth that the solar industry is seeing also means that silver is well positioned for a surge. This is because, according to the Photovoltaic Technology Division of the U.S. Department of Energy, "silver paste is used in 90% of all crystalline silicon photovoltaic cells, which are the most common solar cell."
Moreover, with the latest report from Intergovernmental Panel on Climate Change, or IPCC, saying drastic actions have to be taken to limit green house emissions so that global temperature can be maintained at the safe two degree Celsius below pre-industrial levels, we can expect the solar industry to grow at a faster pace over the next few years. In the end, silver will benefit.
Long story short, while the government might have announced impressive economic data, it's not enough just yet to show that the economy is moving forward. So it shouldn't stop investors from hedging their portfolios.
At the time of publication the author had no position in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.