If you’re thinking of investing for the future, you might be considering precious metals. In this article, we’ll introduce some of the most popular precious metals and the pros and cons of investing in them.
Table of Contents
What Is Precious Metal?
Precious metals are naturally occurring metals that have been assigned a high value for their usefulness and/or beauty. As the name implies, precious metals are rare. In the days before modern mining equipment, sourcing and processing these metals was a very difficult job.
Now, while easier to acquire, these metals are still rare and retain their place in the world as valuable commodities with significant monetary value.
Why Are They a Good Investment?
Precious metals can be good investments for many reasons. Among the main reasons people cite for investing in precious metals is that they offer more security than the dollar. Precious metals cannot be “inflated” (meaning you can’t print more of them), and they are also safe from the volatile changes that can occur in times of political or military unrest.
Precious metals are also a good choice for those who want to diversify their investment portfolios. Having a good balance of stocks, bonds, real estate, and other types of investments helps guard your investments against market volatility.
Top 5 Precious Metals
Palladium
Palladium is one of the rarer precious metals. Not many people are aware of it or its uses, and it’s not always easy to invest in it. However, if you have the opportunity, investing in palladium could be a wise bet.
Palladium has recently become popular across several different industries. It is used in dentistry, chemical processing, and, most importantly, in the manufacturing of vehicles, particularly in catalytic converters.
Catalytic converters are the part of a vehicle that helps reduce harmful emissions, so palladium is likely to play an important role as the automotive industry continues to adapt and move toward a greener future.
Gold
Gold is of course one of the top precious metals to invest in. We’ve all seen ads online or on TV that tout the benefits of buying this precious metal. Gold has long been the go-to safe-haven investment for people who were worried about a volatile dollar, or those who simply wanted to diversify their portfolio.
Due to gold’s popularity, there are many ways to invest in it, including coins, mutual funds, bullion, jewelry, futures, and more, and this variety of options can be appealing. It can also leave you wondering if the old standby is still a worthy investment in our current year.
While it’s true that gold hasn’t been performing as well as it has at other times in history, it can still be a good choice for investment. Getting in on a reliable precious metal like gold when it’s inexpensive can benefit you later should prices rise again (as they often do).
Silver
Silver is the second of the most popular precious metals to invest in. Much like gold, silver is easy to invest in and offers many options for investment. Some people may choose to invest in physical silver. This is usually in the form of coins or bullion.
Some may choose instead to put their money in a company that owns silver mines. Either way, silver is much like gold in that it isn’t a great investment for everyone, but it can be a smart choice for those who are looking for a hedge against inflation or add commodities to their portfolio.
Platinum
Platinum had a difficult year in 2021 due to the effects of the Covid 19 pandemic. Supply chain disruptions and the shortage of automotive semiconductors affected the demand for platinum all year, but experts say to keep an eye on the precious metal as 2022 goes on.
The Assay’s breakdown of precious metals used in electric cars indicates that the automotive industry is changing, and platinum will likely be in high demand in the coming years.
Copper
Copper is a very useful metal, most frequently utilized in industrial and manufacturing settings as well as in home-building, so the demand for it tends to be high. The downside is that in situations where copper-heavy industries decline, such as in an economic downturn where construction slows down, the demand for copper will suffer.
Also, it’s difficult to buy physical copper in small amounts; it’s generally available only in large quantities for industrial use. The best bet for copper might be to invest in copper mining companies or ETFs that have exposure to copper.
Summary
Investing in precious metals is a time-honored and often profitable choice, but it is not right for everyone at all times. As with any type of investment, you’ll want to do your research and speak with a financial professional for guidance.
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