Precious metals are metals that occur naturally in the earths crust and have a high value due to their rarity, industrial use, and investment value. They are unique in that their financial worth is decided not only by traditional supply and demand but also by their popularity as a secure asset during times of economic uncertainty. The most well-known precious metals are gold and silver. However, other precious metals such as platinum and rhodium are good investment vehicles as well.
This article will explore how gold, platinum, silver, and rhodium can make for suitable investments for your portfolio:
Gold
Gold is often what people think of first when they think of investing in precious metals. It has served as currency, a store of value for thousands of years, and a popular asset for investment. It has also served as the object against which other goods have been valued, hence the moniker, gold standard.
Gold is a good investment because it can maintain its value over time. For example, a $20 bill is only worth $20, whereas a $20 gold piece is worth almost 80 times that amount.
However, gold is not just a good investment asset; its also a potential wealth appreciation source. President Nixon closed the gold window in 1971, and ever since then, golds average annualized gains have surpassed those of the Dow Jones Industrial Average and the S&P 500. Additionally, gold has more than doubled the average annualized gains of stock markets since the beginning of the 21st century. Following the 2008 financial crisis, the price of gold has nearly tripled in value.
Platinum
While not as popular as gold or silver, platinum has shown itself to be a well-performing investment over the long term. Investors who buy platinum online will benefit from the demand for this metal by the automotive industry. About half of the platinum produced today is used for catalytic converters in cars. Jewelry and electronics also use platinum.
Unlike gold and silver, only a small amount of platinum is minted into bars and coins. However, you can purchase coins and bars from mints worldwide.
Currently, platinum is cheaper than ever before. However, because over 80% of platinum comes from South Africa, there is a greater chance of a supply disruption. If this happens, the price of platinum will soar. This is why now is the time to invest in this precious metal.
Silver
Although silver often takes a backseat to gold, its gains often outstrip those of gold. For instance, after the crisis of 2008, gold only tripled in price while silver quadrupled in price.
Silver is heavily used for industrial purposes for things like electronics, dental equipment, and solar panels. The supply of silver has been falling for several years, but the industrial demand for silver is predicted to increase in the future. For this reason, now is the ideal time to invest in silver.
Rhodium
Rhodium is a precious metal for which there is a liquid market due to its use in catalytic converters. Like platinum, around 80% of rhodium is used by the automotive industry. Also, like platinum, most of the rhodium supply comes from South Africa. Due to this single supplier, there have been surges in rhodium prices over the years, with rhodium reaching nearly $14,000 in mid-march. Although the price came back down to around $8000 an ounce, it is still trading for multiples higher than in 2016 when it was $625.
Its not as easy to buy rhodium as it is the other precious metals because it doesnt come in coin or bar form. However, it is an asset that is well suited to spectators due to its volatility. Investors can expect to achieve some significant gains, although they may also experience some severe losses.
Conclusion
The best precious metal to invest in depends on your investment goals. For most people, gold is the safest investment because of its stable price. However, you should not overlook platinum, silver, and rhodium. Although they represent more risk, the rewards are significant.