Investing in precious metals is a common investment strategy that works for a lot of people, across many different types of investments. Investors tend to like them because they offer a sort of protection/insulation against inflation. Even better, there’s no real credit risk involved with them.
Precious metal investments aren’t limited to gold, either. Several other precious metals afford investors the opportunity to hedge their bets and protect against unexpected events. There are many unique ways to invest as well:
- Stocks
- Bonds
- Mutual funds
- Certificates
- Bullion
- Coins
- Jewelry
- Other physical versions
- Exchange-traded funds
- Futures options
There is always a certain amount of risk involved in any investment, including precious metals. If you’re thinking about investing in metals, here are five of them to consider. Keep in mind that this is not financial advice and you should always speak with your financial advisor prior to making any vital decisions relevant to your portfolio. Check it out below.
Silver
Silver, like many other metals, offers unique investment methods. One can obtain physical silver in the form of coins or bullion. That’s a time tested method, but can be risky due to its physical nature. Storage becomes a concern as well as theft prevention measures. Silver can also be purchased in investment futures, exchange traded funds, and mining stocks. It tends to be quite liquid and sometimes outperforms stocks, not to mention its aesthetic qualities (for the physical versions, anyway). Silver offers a fairly inexpensive investment option. It tends to retain its value during uncertain economic times and, much like gold, is often used as an inflation hedge. Sometimes it even raises in value. That doesn’t mean it’s full-proof (nothing really is), but it is a worthwhile precious metal to consider when expanding your portfolio.
Gold
The precious metal most investors are likely to add to their portfolios is probably gold. There are plenty of good reasons: it retains its value even through inflation, prices go up when the value of the U.S. dollar goes down, and it is relatively safe when there is uncertainty around the world. Gold has made an indelible mark on society for millennia. It’s value is unquestioned Physical gold investments usually take the form of jewelry, coins, bullion, and bars. If you’re looking to dip your toes into physical gold investing, consider a one-troy ounce gold bar investment. Other popular gold investment options, like stocks, can be influenced by the price of gold but are also affected by other market factors. Exchange Traded Funds and mutual funds are a more liquid option for taking advantage of gold’s stability while having a few more overall liquidity. There are also futures, mining options, and good bonds available to the savvy investor wishing to diversify with this particular precious metal.
Platinum
It’s never a bad move to vary the types of precious metals you have in your portfolio. With that in mind, perhaps it’s time to consider platinum. Platinum may not be the first thing you think of when considering precious metal investments, but it’s certainly worth considering. As an industrial metal, it has high demand in the automotive industry. Because of that, platinum prices can rise or fall depending on the state of the automotive industry itself. It trades at a premium compared to gold and holds its own during economic recovery. Moreover, it’s ability to improve risk-adjusted returns should not be overlooked when diversifying a portfolio. While it historically performs well, it is a rare metal and production is slowing down. This will probably do little to temper demand for the metal, as it offers quite a bit of intrinsic value to investors everywhere. The best ways to invest in this metal are physically in the form of coins, jewelry, or bullion, through ETFs, or by trading in the slightly more risky Platinum futures.
Palladium
Another rare precious metal, palladium has a lot of uses in the industrial sector. These might include as parts of catalytic converters or in some of the electronics we use everyday. It’s a durable, malleable metal that has a million uses. But is it a good investment? Like all precious metals, there may be some risk associated with it such as more sellers than buyers. But usually, these risks are at a minimum depending on the type of precious metal. Palladium is in high demand and historically performs quite well. Investors can find it available in all the same investment formats as the other precious metals on this list,
Copper
Copper is overlooked but has potential. Used in everything from electrical wiring and pipes to industrial machinery. Copper is constantly in demand. It also guards against market changes and might help curb volatility and risk. Ultimately, investing in multiple varieties of precious metals including copper can be a great way to diversify your portfolio while giving you more investment options over time.
