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As inflation devalues currencies around the world, many investors are seeking an inflation-resistant haven for their assets. Traditionally, that meant gold, which has been seen as a store of value for thousands of years. While its price does fluctuate, gold is still seen as an investment that will have value even if the stock market crashes, governments and companies default on their bonds, and currencies lose most of their worth.
But good as gold is, it’s not the only member of its precious metal asset class. There are other investments that can serve as a hedge against inflation and a shield against financial disaster.
Gold, silver, platinum, and palladium are the Big Four precious metals. While other metals are scarcer (we’re looking at you, rhodium), their very scarcity makes them unsuitable as investments. Let’s see how the Big Four stack up.
|Price/oz. (10/31/22)*||Amount mined 2021 (metric tons)||Top import sources (2017-2020)|
|Gold||$1,649||3,065||China, Australia, Russia, USA|
|Silver||$19.39||24,000||Mexico, China, Peru, Chile, Russia|
|Platinum||$942||180||South Africa, Russia, Zimbabwe, Canada|
|Palladium||$1,831||200||South Africa, Russia, Canada, Zimbabwe|
* These prices are for illustrative purposes only. Current prices may vary.
Precious metals compared
The Big Four precious metals are often divided into two pairs. People have invested in gold and silver for thousands of years. These metals not only have financial value but also possess a unique allure for artisans, collectors, and purchasers of fine jewelry. Platinum and palladium don’t have the same historical pedigree, but they are in high demand now for their industrial applications.
Gold — Gold and silver have historically been rivals for the precious metal crown. For centuries, gold was the backbone of the world’s monetary systems and the measure of national wealth. And because of its warm, lustrous appearance, it has been both a medium for the creation of beautiful jewelry and a signifier of wealth and power. While gold is increasingly used in electronics and as a catalyst in various industrial processes, its price is more stable, making it the go-to option for those just beginning to invest in precious metals and for those seeking shelter from inflation and dramatic price fluctuations. Gold is dense and heavy, but because its value per ounce is currently 85 times that of silver, it is a more portable asset.
Silver — Silver is somewhat more volatile than gold; its price tends to vary more sharply because it has so many industrial uses, ranging from semiconductors to LEDs to water purification systems. Its price tends to move in the same direction as gold’s, but more sharply. This can present investors with the opportunity to earn short-term profits by attempting to time the market. For those whose attraction to precious metals coincides with an interest in numismatics, silver coins present a relatively affordable way to enter the precious metals market. But its affordability relative to gold may present challenges with respect to storage and transport. Ten thousand dollars worth of silver at current prices weighs 32 pounds and takes up 84 cubic inches of space.
Platinum — Platinum is an element that has become synonymous with great value. You probably have a “platinum” credit card in your wallet. Like gold and silver, platinum is a beautiful metal that’s used in high-end jewelry, watches, and coins – and that’s where the highest demand for platinum comes from. But global demand for platinum is also rising due to its use in various industrial processes. It has applications in the chemical, aerospace, electronic, and automobile industries. As with all precious metals, platinum’s value derives from its relative scarcity. Seventy-two percent of the world’s annual platinum production comes from just one country: South Africa.
Palladium — Palladium is the rarest of the Big Four precious metals – and consequently, the most expensive. More than three-fourths of the world’s palladium comes from just two countries (Russia and South Africa), so its price is sensitive to political and economic developments in those two nations. It may not have the luster and allure of gold, silver and platinum, but there’s a huge demand for palladium now due to its use in the catalytic converters that help control vehicle emissions. It also has some uses in dentistry and electronics.
Getting Started: How to Invest in Precious Metals
Whether you’re new to precious metals or are a seasoned investor looking to diversify your holdings, it’s important to have a solid partner to help you purchase and secure your investments.
Goldco has over a decade of experience in helping investors facilitate the set up of a Precious Metals IRA and also offers direct sales of gold and silver for customers who wish to add them to their personal portfolios. The company offers a buy-back program guaranteed at the highest price and has a Better Business Bureau® rating of A+ based on over 400 reviews to date.
Fill out your information here to receive a free 2023 wealth protection kit from Goldco and learn more about which precious metal best fits your investment strategy.
The bottom line on precious metals
Which precious metal to invest in depends on your investment strategy and goals. Are you looking primarily for a store of wealth and a hedge against inflation to buy and hold over the long term? Or are you looking to make money as an active trader by timing the commodities markets?
If you want to add precious metals to your IRA, gold and silver are good options for those who plan to hold their investments until they reach retirement age. And if you want to trade in the precious metals markets, platinum and palladium are attractive due to the rising demand for those materials in advanced industrial applications.