Your guide to the 4 major precious metals
Precious metals are a reliable defensive investment strategy. With uncertainty taking over financial markets, investors are asking themselves how they can protect their wealth and balance their portfolios. Precious metals like gold and silver are favourite choices because they have intrinsic value and they maintain and improve their worth compared to the dollar. But there are other options today as well, including platinum and palladium. How do you know which one is right for your portfolio?
Gold – Gold is the most common precious metal used by investors. Readily available in gold bars or gold coins, you have a lot of options for buying gold. One tried and true method of buying gold is investing in mint-produced gold coins, of which there are many produced around the world by nationally-owned mints. You can also branch out into gold bars or rounds, which are produced by private gold refiners.
Investors should stick to buying gold bullion – high-purity gold products such as gold bars and gold coins for the best returns with the lowest premiums over spot.
Silver – Gold’s little cousin, silver is the cheapest precious metal by far, trading at around $20 an ounce. Silver is great if you want to learn more about your options beyond gold investments and see bigger potential gains.
Silver prices are closely correlated with gold prices, moving up and down alongside gold. But silver has a tendency to move in wider swings, gaining faster and losing faster. Silver is a great investment for investors willing to take on a little more risk in exchange for bigger growth.
Platinum – Commonly available in platinum bars for investors, platinum is popular in jewelry and as a catalyst for chemical reactions. Industry forecasters predict platinum demand will rise by 5% in 2019, but lately demand and prices have been in a slump. That’s a great opportunity for anyone looking to make a move in platinum.
Palladium – Palladium is another white metal and palladium prices per ounce are higher than gold prices right now. Palladium prices have been climbing steadily since 2010. There have been a few bumps along the way, but if you invested in early 2009, you would have seen a 670% return over a ten-year period – better than either silver or gold have had to offer in the same decade.
Palladium prices are closely related to where it’s found and how it’s mined. Palladium is largely a by-product of platinum mining, showing up in the same deposits. It was largely unwanted until it began to be used in catalytic converters common in automobiles in the 1970s. Its applications have continued to grow, and palladium today is often used as an alloy in creating white gold, as well as in computers, smartphones, and gas purification.
What’s interesting about palladium is that while platinum prices are dropping (and therefore mining efforts), demand for palladium continues to rise – but the two can’t be mined without each other. In other words, expect to see palladium prices continue to rise.
Familiarize yourself with more precious metal options or diversify your precious metal holdings with all four major metals.