Gold is the most attractive precious metal, both in terms of appearance and return on investment, because it’s widely used and seen by consumers. But is it really such an excellent investment in the current environment? Well, not as excellent as many beginners believe for many reasons, such as the fact that it’s expensive at about $1,280 per ounce and gold jewelry demand is down in India and China.
So, if you’re looking for better investments in precious metals, you should look into the profitable possibilities of these five precious metals.
Silver is used for both industrial and commercial purposes, the latter mainly in jewelry. As a sister metal to gold, its price movements reflect those of gold but typically at a more significant rate – the rule of thumb is that the trading price of silver tends to dip lower and surge higher than gold.
If you’re going to invest in silver, you have to remember that the challenges you will face are similar to those faced by investors involved in other precious metals. You have to know the best ways to profit from the price movements and understand the factors that influence them. Keep in mind, for one thing, that silver has both precious metal and industrial applications and, as such, it’s more subject to the constraints of supply and demand than its sister metal.
While platinum is known to many consumers for its use in high-end jewelry, it has a wide range of industrial applications, too. It’s an essential metal, for example, in the production of catalytic converters in diesel engine-powered vehicles.
While it’s among the more expensive precious metals being traded, it’s return on investment can also be high – as seasoned investors say it, with high risks taken comes high rewards if you play your cards right. Remember, nonetheless, that platinum trades lower than gold in the current market, at 27.6% lower, a factor that should be considered when choosing from among several platinum funds.
You should also consider a platinum investment because it can provide balance to your diversified portfolio. This is because stocks of precious metals and mutual funds are typically traded independently of the stock market.
The sister metal to platinum, palladium is often overlooked in favor of its more glamorous sister, a shame indeed because it has its own investment merits. Palladium has several industrial uses and costs less than platinum in most cases so it’s a great precious metal to put your money on.
You can look at palladium as an inflation hedge, even as a way to get your foot in the door of precious metals investments. You should also consider the growing demand for it in the automobile industry, as well as its consistent demand for use in consumer products like dental crowns.
Note: The primary palladium ETF holds actual palladium stored in highly secure vaults.
With aluminum being among the most abundant metals on earth, it’s a great investment for beginners learning the ropes of the metals investment industry. Plus, it’s such a commonly used metal that you have come across it in many forms, from your car to your home furniture and appliances.
Most market analysts and players are also optimistic about the price performance of aluminum, year in and year out. There will inevitably be disappointments but aluminum’s overall performance has been consistently good through the years. This isn’t surprising since with its high demand, its price performance will often be in favor of investors.
There are several ways of becoming an aluminum investor. You can choose futures and options, purchase exchange-traded notes, and trade aluminum-related stocks, even become involved in an ETF involving several aluminum-producing companies including mining enterprises.
Keep in mind that steel’s price performance is disproportionately influenced by China’s consumption of the industrial metal. China being one of the world’s largest steel users, the country’s demand for it will push the prices up and down in ways that can frustrate sellers and buyers at various times. As with all investments in metals, being a high risk taker is a must for success in steel investments.
You may want to swap your gold investments for steel investments, too. You can start with just a small amount for experimental purposes and then adjust your steel investment as needed. You may also invest in top exchange-traded funds that offer relatively high dividends.
In conclusion, becoming an investor in commodity ETFs isn’t for the weak of constitution or the faint of heart. With its high rewards, the risks are high, too, and these can bring down your portfolio in bad times even as these bolster it in good times. If you’re not a risk taker, then you should consider other investments like blue-chip stocks and government bonds that bring in modest rewards for low risks.