Are Precious Metals a Good Investment?

We love the shine and sparkle of metals when it comes to jewelry, but precious metals can also augment investment portfolios. Gold, silver, and platinum are three of the most common commodities to invest in. Each presents different advantages and disadvantages. Here’s a closer look.

(Pixabay / claus_indesign)

Gold

Uses: Jewelry, currency, dentistry, electronics

Gold stands out because of its staying power.

Gold doesn’t rust or corrode. It is also very malleable and an excellent conductor of heat and electrical current. Gold can be a safe investment because it is less vulnerable to the vicissitudes of the market. Because there’s so much gold in circulation above ground, the amount that is brought out of the ground doesn’t have as much power to affect supply and demand. Gold becomes particularly valuable when the financial market starts to look shaky. This can occur in times of war, political turmoil, and high inflation. Gold prices do fluctuate, but in times of fear and instability, gold is one of the surest bets in the investment world. Plus, gold plating jewelry never goes out of style.

Silver

Uses: Electrical appliances, medical devices, industrial items (bearings, etc.), electrical components, batteries, microcircuits

Silver is popular as an investment commodity, but it’s also indispensable as an industrial metal. Thus, it is more susceptible to market ups and downs. Spurred on by new industrial innovations, silver prices can shoot up dramatically. So silver may not be as safe as gold, but it can be a high-yield investment.

Platinum

Uses: Industrial (automotive catalysts), jewelry, computer technologies, chemical refining catalysts

Platinum is rarer than gold. In fact, most of it comes from just two countries: South Africa and Russia. On the one hand, this paucity can make platinum more valuable than other metals such as gold. On the other hand, it can lead to back-door trading practices and trafficking that can falsely inflate platinum prices. And while platinum is in high demand right now due to the key role it plays in the auto industry, that could change. Environmentally-conscious legislation is pushing for more catalytic converters because they help reduce harmful emissions. Since platinum is the material of choice for these converters, the future looks bright. However, some automakers are beginning to build the converters from palladium because it’s cheaper. Thus, platinum can yield a great return, but it may be a risky choice in the future.

Many savvy investors have benefited from buying into precious metals. Know your investment goals before taking the plunge, and monitor your returns closely. If done wisely, investing in precious metals can be a great way to diversify your portfolio.

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