As an investor, there’s a good chance that you’ve heard of gold before. It’s a staple in many portfolios across the world and has been for centuries (if not longer). Precious metals in general have made quite a splash, to put it lightly.
It raises some questions, though. What makes precious metals so special, right? Are they really worth adding to our portfolios, or are they just another fad or buzzword that a ton of businesses are trying to capitalize on? The answer is somewhere in the middle, admittedly, but we’ll be explaining that along the way.
Unfortunately, there are just a lot of questions that people tend to have if they’re looking to start investing in precious metals. Considering that there are a bunch of types of them to begin with, and each has its own unique pros and cons, this hardly comes as a surprise. The trouble comes when we try to make these decisions on our own.
Today, we’d like to guide you when it comes to investing in precious metals (at least, as much as we can).
Precious Metals: The Chemistry Behind Them
One of the most important parts to remember about this topic is that the primary reason precious metals have as much value as they do is thanks to their chemical properties. Admittedly, it does seem a little strange that a big field in investing is ruled so heavily by chemistry, but it’s true!
The main four metals that investors are concerned about are gold, silver, palladium, and platinum. Interestingly enough, palladium is quite similar to platinum – it’s even considered in the platinum “family” of metals. More on that later, though – for now, let’s examine each of them individually.
Out of all the precious metals we’ll be discussing here today, silver is the one that is the least “valuable” as far as investing goes. That is, it’s less expensive to purchase and thus will garner smaller gains later down the line. While it can be used as security, it’s not as effective at that as gold.
With that said, it’s not exactly something to sleep on, either. On a chemical level, silver is a type of metal that is soft and malleable. It’s almost white, though not quite on the same level as the platinum family. Beyond that, it’s also ductile and can conduct both electricity and heat.
Part of the appeal here is that there are many practical uses for silver as well, beyond its popularity in jewellery (which can’t be understated, really). For instance, it’s quite popular in electronics. This is largely because of how well the metal conducts electricity.
Interestingly enough, it’s also used a lot in photography. This is mostly for black and white photos, but there remain plenty of applications for the metal in this field today. Of course, silver cutlery is also quite popular.
Investing and gold go hand in hand in the minds of many of us out there. For now, though, we’ll focus on it in a more “practical” sense. Part of what makes it stand out is the yellow sheen, which is different from the other precious metals that are considered valuable. Another tidbit that adds to its versatility is that out of the whole periodic table, it’s the metal that is the most malleable and ductile.
Roughly seventy-five per cent of the gold that we collect and the process ends up turned into jewellery. Clearly, the market for it isn’t diminishing any time soon – especially when it comes to making jewellery and other trinkets or collectables.
Similar to silver, gold also has applications in the electronics industry thanks to how it conducts electricity, but it remains fairly inert. The other main use for it is in bullion of course, which is what most investors are familiar with it from.
Now, let’s turn our attention to the more expensive precious metals. Platinum is also near-white, though brighter in colour and brighter in shine intensity. Funny enough, when it was first discovered, the Spanish Conquistadors who found it thought it was just silver and thus thought it was worthless, tossing it back into the river.
Clearly, they were quite incorrect. These days, it’s one of the most desirable and expensive precious metals out there. Compared to gold, we don’t refine nearly as much of it into jewellery. This makes the pieces that do exist a bit more “desirable” and “rare,” of course, but this isn’t the main way that people have started to utilize platinum.
Rather, because of its density paired with its ductile nature and malleability, it’s quite valuable in the car manufacturing industry. We know we might sound like a broken record when it comes to those “ductile” and “malleability” factors, but they are the primary traits that make a metal “precious,” so that’s why we keep repeating it.
Other places that we’ll see platinum used are surgical tools, car manufacturing, and even laboratory instruments and utensils. At the end of the day, there are just a whole lot of ways we can utilize these metals, so it should come as no surprise that they’re so desirable. Platinum tends not to be fashioned into bullion very often, but occasionally it is, and some investors buy it.
Many investors take pause when they look at palladium vs gold prices since there’s quite a disparity there. Admittedly, most folks aren’t familiar with palladium in the first place, so it can be a bit confusing to look at when you don’t know what’s happening. Unsurprisingly, the uses for palladium are pretty much the same as platinum.
The biggest difference is that comparatively, palladium is used more in manufacturing than platinum is. In fact, the biggest industry that uses it is the car manufacturing industry, which utilizes these metals to create automobiles that create smaller amounts of greenhouse gases.
With that said, they are still valuable as far as investing goes. The trouble is figuring out what will be better for us. That’s what we’ll cover in the next section!
What Should We Invest in?
All of this leads many investors to wonder which of the precious metals they should invest in. To a certain extent, it will really depend on what your goal is in making the investment. For instance, if you look at articles like this one, you’ll see that one of the biggest reasons to invest in gold is to store wealth.
Essentially, it’s a very “safe” form of investing because there is very little risk. It’s ideal for anyone saving up for retirement or aiming to protect themselves from inflation. So, if that’s the type of investment that you’re interested in, it would probably be quite worthwhile for you.
However, all things considered, that’s not the direction that everyone wants to take. With no risk comes no reward – most of us have heard that saying before, right? We can certainly use it here.
Options like palladium might be better for those of us out there looking for more excitement in our portfolios. Sure, gold and silver are classics. However, they don’t really allow us to branch out and explore other areas of the market. Meanwhile, platinum and palladium have actually gone up significantly in value over the past several years.
Now, if you aren’t sure which route to take, we don’t blame you. It’s hard to navigate, especially for anyone who isn’t overly familiar with precious metals in the first place. Often, we are told that the only options are gold and silver if we want to make money or choose wisely.
Thankfully, we have access to more information these days. Consider talking to an investing company or a financial advisor if you have more questions about how to invest in something like Palladium. After all, it’s rarely made into bullion, so it can be somewhat more complicated to add to our portfolio.
We have to decide for ourselves whether or not the extra work is worth it. Certainly, it increases the likelihood that we’ll make significant gains on our assets, rather than just storing our wealth for later. More risk does tend to mean more reward in these situations, although it can be scary to take that leap.
Hopefully, this article has helped to shed some light on the topic. Make sure you check out the resources we’ve provided to get some additional perspectives on the matter since there really is a lot to cover. We couldn’t exactly discuss all of it here.
Just remember that you can always ask your broker for more details as well once you’ve picked one. There are plenty of them to select from, so make sure you find one that offers a wide selection of precious metal assets.