What To Know About Investing In Precious Metals

Gold, silver, platinum, and palladium represent four unique investment options today – here’s what you need to know to make an informed investment in precious metals.
If you’re new to the world of investing in precious metals, it can be a little confusing. Which metals offer the best protection or return on investment? Is there one that is inherently more stable than the rest? Why is gold so popular today, but you rarely hear about palladium? These questions and more are all important, so let’s take a look at each precious metal listed above to uncover the important characteristics of each option.

Gold – The Classic Commodity: Let’s begin with the classic precious metals option – gold. This investable metal has been collected for thousands of years and has an intrinsic value that equities can’t match. The value of gold is driven largely by consumer sentiment, which means that its price isn’t really dictated by supply and demand. Instead, when gold is hoarded by large-scale investors, its price goes up. When it is liquidated by those with large gold reserves, the price drops. Here’s why gold is a great option today:

  1. Gold retains its value well, and it acts as a powerful counterpoint to declining equity, real estate, or bond markets.
  1. Global instability can push investors towards gold since it is a universally-valuable commodity that isn’t linked to a country’s currency. And, since it has so much value per ounce, the physical storage of gold is quite easy to accomplish – $20,000 in gold only weighs about a pound!
  1. Gold is also the ideal hedge against financial market instability, as investors tend to flock to the precious metal to balance out overall risk in their portfolios.

The bottom line: Gold is a durable and time-tested investment option for those who value stability and tangible worth.

Silver – An In-Demand Metal: Silver is used in almost every industry – from automotive to aerospace, electronics manufacturing to fashion, and this universal applicability means it will always deliver value as either an investment vehicle or an industrial metal. Silver is a good option for investors, as it:

  1. Can increase in value quicker than most other metals due to a greater connection to market volatility.
  1. It is becoming even more in-demand as emerging economies demand increasingly greater quantities of the metal to make electronic parts, electrical appliances, and medical products.
  1. Electric vehicle innovations will demand greater use of silver for microcircuits and batteries.

The bottom line: Silver is an effective metal of value for any investment portfolio, but its most powerful characteristic is its use in industrial applications. This will keep it relevant and valuable for years to come.

Platinum – A Rare Precious Metal Investment Option: Just like its similarly-hued cousin silver, platinum is an in-demand industrial metal that owes much of its value to the automotive industry, the computer field, and jewelry designers. It has spiked in price to being more expensive than gold at certain points over the past ten years. Here are some factors to consider if you feel platinum is right for your investment portfolio:

  1. The industrial bias for this important metal will keep it relevant for a long time – thus, preserving its value.
  1. As governments continue to push for clean air reforms, platinum’s use in catalytic converters should deliver a strong upside for this important metal.
  1. Platinum is heavily mined these days in just two countries – Russia and South Africa. This points to the potential for some volatility, which can equate to rapid fluctuations and an ability to make serious gains in a short time.

The bottom line: Platinum is generally regarded as the most volatile of the precious metals, but it can be lucrative if managed appropriately.

Palladium – “White Gold” Is Another Precious Metal Investment Option: This is a less-common investment option today, but certainly not one that should be ignored. There are several key benefits to investing in palladium, including:

  1. The greater valuation swings inherent to palladium pricing makes it a choice for those looking to speculate or take advantage of short-term moves.
  1. Supply is generally shrinking as demand increases, which is the classic formula for price appreciation over the years.
  1. Palladium is used extensively in both automotive applications as well as in dentistry. Both fields are seeing significant growth as citizens of developing nations are driving more cars and people are living longer today – driving the need for more dental procedures.

The bottom line: Palladium isn’t as popular as silver or gold, but it is a an unique investment option for most individuals as it is in shorter supply these days versus existing demand.

How Can I Invest in Precious Metals?

There are several options for investing in precious metals. You can opt for a metals-backed IRA, like a Gold IRA, Platinum IRA, and so on. Or, you can invest directly in precious metals-related companies via the stock market. Precious metals ETFs are also available, and they offer a different level of portfolio diversity since they invest in physical metal exposure and futures-based exposure. There are so many ways to invest in precious metals, so reach out to your preferred investment partner for more information about your options today.

Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.