As an investor, there are many financial assets that you can invest in. If you are into companies, you can invest in stocks and if you are interested in global macro issues, you can easily invest in currencies or global bonds. Commodities are also popular among investors. In fact, there are many investors who have made a fortune investing in commodities like crude oil, soybeans and corn. In this article, we will look at the precious metals market and highlight the best precious metals you can trade and how you can do it.

 

Best Precious Metals #1: Gold

There can be no other criterion, no other standard than gold. Yes, gold which never changes, which can be shaped into ingots, bars, coins, which has no nationality, and which is eternally and universally accepted as the unalterable fiduciary value par excellence.” – Charles de Gaulle

Gold is the best-known precious metal in the world. It has been used as a store of value for centuries. Today, gold is a very different from other forms of commodities. This is simply because it is never valued as other metals, which are valued using supply and demand metrics. Instead, gold is viewed as a currency and as a safe haven. In this, its movement is mostly reliant on the actions of the Federal Reserve and the health of the economy. For example, when the Federal Reserve hikes interest rates, the value of the US dollar tends to move up. As this happens, the price of gold tends to decline because it is usually inversely-related to the dollar. Most of the world’s gold is mined in countries like China, Australia, Russia, United States, and South Africa.

Gold
In the past five years, the price of gold has risen by more than 20%. This chart shows the performance of gold in 2019.

Best Precious Metals #2: Silver

Silver is often called the poor man’s gold. This is because while the price of gold is above $1,500 per ounce, silver costs less than $20. There is one main reason for this. While silver is a precious metal, it is mostly an industrial metal that is used in the manufacture of silverware, silver coins, mirrors, and other ornaments. For this reason, its price movement is usually in relation to the demand and supply. Therefore, if the supply of the metal increases, the price tends to decline. In recent years, there have been a lot of oversupply of silver and a lot of underdemand, which has led the price to remain significantly lower. Most of the world’s silver comes from Mexico, Peru, China, Russia, and Australia.

Silver
In the past five years, the price of silver has declined by 6.9%. This year alone, the metal has risen by 16% as shown in this chart.

Best Precious Metals #3: Palladium

Palladium is another precious metal that you can make money in. Like silver and unlike gold, palladium is a precious and industrial metal that is mostly used in the automobile industry. In terms of pricing, palladium, which is trading at more than $1,500 per ounce is more valuable than gold, which is trading at $1495.

Palladium belongs to a group of metals known as platinum group metals. The metal’s characteristics make it ideal for use as a catalytic converter in the automobile industry. A catalytic converter is put in vehicle exhausts to capture carbon and reduce emissions. Platinum is used mostly in gasoline cars.

 

The reason why the price has been increasing is that demand from automakers has been increasing. This is partly because the world’s economy is doing well. It is also partly because regulators in Europe, Asia, and North America have started to put pressure on auto manufacturers to reduce carbon emissions. While this demand has been increasing, supply has not. Indeed, the annual supply of palladium is lower than the amount that manufacturers need.

Palladium
Most of the world’s palladium comes from Russia, South Africa, and Zimbabwe. Most of it is consumed by auto manufacturers in Asia and Europe. This year alone, the price of palladium has increased by 23% as shown here.

Best Precious Metals #4: Platinum

Platinum is a metal that is very similar to palladium. It belongs to the platinum group metals (PGM) and is used mostly in the automobile industry as a catalytic converter. While palladium is used mostly in gasoline cars, platinum is mostly used in diesel vehicles to reduce the amount of carbon that is released to the environment.

Platinum
As with palladium, most of the platinum is mined in Russia, South Africa, and Zimbabwe. This year, platinum has gained by 19% as shown on the chart below.

How to Invest in Precious Metals

If you are interested in investing in the precious metals market, there are several methods you can use, In this part, we will look at the easiest ways to invest in the precious metals mentioned above. Invest in Precious Metal CFDs

One way you can invest in the metals is to buy the physical bars. However, this has its own drawbacks. First, it is risky to hold precious metals because they can be stolen or get lost. Second, selling the physical metals can be a difficult thing. Finally, it is possible to buy fake precious metals. Therefore, we recommend that you use the financial market to buy the metals. In the United States, there are several brokers that allow you to invest in these metals. Some of the brokers that allow you to invest in these precious metals are Fidelity and Interactive Brokers.

Invest in Precious Metals Stocks

Another way of investing in precious metals indirectly is to invest in the companies that produce these stocks. The argument is that the stock prices of these companies do well when the metals do well. Some of the biggest producers of precious metals that you can invest in are Barrick Gold, Newmont Mining, and Goldcorp among others.

Invest in Precious Metals ETFs

An Exchange Traded Fund (ETF) is a financial asset that is created by large investment companies like Blackrock, Schwab, Invesco, and Vanguard. There are several ETFs that are created with precious metals in mind. Some of these ETFs are: SPDR Gold Shares, VanEck Gold shares, The ETFS Physical Palladium Shares, and the iShares MSCI Global Select Metals & Mining Producers ETF among others.

Takeaway

In this article, we have looked at the best precious metals you can invest in. We have also looked at the various methods you can use to invest in these metals. The key to success is to learn more about the metals, create a strategy, and invest. Instead of going all in on the metals, we recommend that you put only a small portion of your holdings on these metals.