Many people preach diversification when investing in order to balance out the desire for short-term profits and long-term security and growth. Of course, investing in precious metals can often lead to great results in both the short-term and long-term if done properly and with good timing. Even within the niche of precious metals, there are opportunities to diversify with gold, silver, platinum and palladium. These are the big four of precious metals investing, but since they are used in different industries and hold their value for some different reasons, they can be used to diversify against each other.
Investing in Precious Metals through Gold
Gold has been one of the best options for those investing in precious metals. The price has been on a steady rise for quite some time and as it holds a lot of value for its historical role in currency, as well as for its industrial uses, it seems to be an extremely safe investment.
With a growing use in electronic circuitry, even the slow rise in gold mining has not been enough to keep up with demand and level off the price of gold. That’s good news for investors, who should have continued opportunities to invest wisely with gold in the future. In addition, the economic situation that includes a lot of governments facing decisions to enact inflationary policy or see their country’s economic take a big hit, could lead to a rise in gold prices as well.
Investing in Precious Metals with Silver
On an ounce-per-ounce basis, silver is not nearly as valuable as gold. However, when compared together, it is possible for silver to make larger gains by percentage than gold. They tend to match each other’s movements very closely on a day-to-day basis.
It is wise to avoid getting caught up in a head-to-head comparison of the price per ounce, as investors can simply buy higher quantities of it in order to give themselves a similar exposure to that which they already have.
Choosing Palladium When Investing in Precious Metals
When it comes to investing, palladium is pretty young in the grand scheme of things. With international demand growing rapidly in the 1990s, palladium garnered a lot more attention than it had. The precious metal is best known, though, for being used in catalytic converters to reduce emissions and pollution on automobiles. With such a large percentage of the value of palladium being tied to this use, it is likely a little bit less valuable overall than precious metals that have wider ranging uses and thus less connection to any one individual use for pricing.
In addition to catalytic converters, palladium is growing increasingly common in electronics, which should help to keep its pricing high.
Platinum as an Investment
Platinum prices have been growing for several years, including during times of economic downturns. Platinum is commonly used in medical equipment, so it is one way of betting on the medical industry going forward. In addition, platinum is gaining steam for its use in jewelry. Given that it is widely used in automobiles for their catalytic converters and that electronic cars may make catalytic converters significantly less common in future years, it may need to be cause for a lot of concern. Any investments in platinum should be monitored closely to make sure that automobile trends don’t leave investors high and dry.
Platinum is also used in wires, magnets, electrodes and some electronic circuits. These help to maintain its price floor, but without the use in catalytic converters, platinum would be significantly less valuable. So while it does appear to be a relatively safe purchase overall, that can’t be guaranteed.
