Recent volatility in the market has caused some investors to wonder if the amazing ascent of precious metals in the marketplace over the last decade is finally at an end. At the same time, central banks the world over are quietly buying up stores of gold and silver and repatriating their gold stores in order to hedge against currency devaluations, leading many to conclude that the precious metals outlook remains strong after all.
Gold is a Safety Net
Practically since it was first mined from the earth, gold has been treasured by humans for its use in fine jewelry and coins, used as currency and traded for goods and services. In uncertain economic times, investors are reassured by owning stores of gold, which will always retain a certain amount of intrinsic value no matter what happens in the stock market or with global currencies or economies. Whether in physical form or through exchange-traded funds, gold is considered a safety net for investors to diversify their portfolios, protect their wealth and hedge against inflation.
Silver is an Industrial Commodity
While also used and traded as a form of currency, minted into coins and fashioned into fine jewelry, silver is increasingly being regarded as an industrial commodity, due to its many uses in manufacturing, some of which actually destroy the metal itself, removing it forever from the world’s inventory. As the demand for electronic goods rises worldwide, so will the demand for silver, giving it a solid place in the commodities market for many years to come.
The Precious Metals Outlook for Platinum as the New Gold
The price of platinum currently rivals the per-ounce price of gold, and indeed platinum has become quite popular for use in fine jewelry. While the gold medal is still the top award in an Olympic contest, a platinum credit card nonetheless trumps a gold one. With Russia and South Africa producing the majority of the world’s platinum, supply has at times been sporadic, causing the precious metal to be a bit volatile in price.
Platinum is also minted into coins and collected in bullion form, but its latest use is in the production of catalytic converters, increasing its value as an industrial commodity. With increasing regulation on the automobile industry to reduce global air pollution, the use of platinum in the industry is only expected to increase. Some experts estimate that if platinum excavation were to cease, remaining stocks would be depleted inside of one year.
Palladium Steps up to the Plate
Another key component in the manufacture of catalytic converters is palladium, which trades at a fraction of the price of platinum but much higher than silver. Palladium is found in the same Ural Mountains of Russia and therefore supply is somewhat controlled. Combined with gold to make surgical instruments, watches and electrical contacts, palladium has a number of other industrial uses as well. Palladium is a vital metal for use in the dental field.
Precious Metals Outlook
As long as the economy remains weak and uncertainty abounds, investors will continue to invest in precious metals as they have over the last decade, in order to diversify portfolios that otherwise might be too heavily weighted in stocks and bonds for comfort. Precious metals can be bought and sold in physical form or traded by way of exchange traded funds, which allow investors to purchase the metal without having to take physical delivery of it. While volatility in pricing continues, making this the ideal time to invest, many experts are predicting that precious metals will continue their ascent as they have done after each previous retrenchment, and the precious metals outlook remains strong.
