Starting a Precious Metal Portfolio

Many investors realize that silver and gold are an essential part of a precious metal portfolio. People invest in gold and silver because it holds its value over the long term. Gold and silver act as a hedge when the market is volatile.

While gold and silver are the most popular of the precious metals, there are others that round out your portfolio. Platinum and palladium are two other regularly invested metals. Each metal has its on valuation and uses. They all react differently to the market, and it is important to understand the differences between each metal before investing. Discussing the best options for your investment goals with a reputable broker such as Birch Gold Group is critical to ensure a strong portfolio.

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Allocation

Gold and Silver 

Gold is used in jewelry and some smaller uses in manufacturing. Silver has a place in jewelry production but is also a large part of electronics manufacturing. Platinum is also used in more high-end jewelry but primarily is used in high-tech components and the automotive industry.

Before launching your precious metals portfolio, it’s best to lay the groundwork in gold and silver. These are larger and better-established markets. They offer more predictable results over the long term. Platinum and palladium are smaller and more volatile markets and not for the faint of heart.

Platinum

In good economic times, platinum fetches a higher price than gold. It is ten times more rare than gold and has much smaller levels of extraction. In 2008 platinum was trading at over $2,200 an ounce whereas in 2015 it is around $800 an ounce. It is mostly known as an industrial metal, and it is used in the automotive industry and computer industry. When consumer buying of cars or computers drops, so does the demand for platinum.

In addition, Platinum is mined in South Africa and Russia this concentration can also lead to price manipulation.

Palladium

A relative newcomer on the scene, Palladium is a more uncertain element. Its popularity is growing, and demand is driven primarily by industrial manufacturers.

In 2000 the price of an ounce of Palladium was around $1000 whereas today it trades between $400 and $500 an ounce.

The variances in the market should not be the prime driving motivation in your portfolio. It is important to set up long-term investing goals and stick with the plan. Precious metals such as gold and silver are great ways to maintain wealth over a long period of time while the most volatile metals such as platinum and Palladium require a practiced eye to managing the risk.