Which Precious Metals Should You Invest In?

While gold is the most well-known precious metal, silver, platinum, and palladium are also popular investment choices. In this article, we'll explore the differences between these precious metals and help you determine which might be the best fit for your investment portfolio.

Gold

History

Gold's rarity and beauty have made it a highly valued metal throughout history. Its earliest recorded use dates back to c. 4600–4200 BC in Eastern Europe, where it was prized for its aesthetic qualities. By 1500 BC, the ancient Egyptians valued gold for wealth and accounting (coins were not used in Egypt until the Hellenistic period), had adopted gold as a currency, using it to adorn their temples and tombs.

The Greeks and Romans also recognized gold's value, using it to mint coins and create intricate jewelry. The Romans, in fact, gave gold its chemical symbol, Au, from the Latin word for gold, aurum.

In the Middle Ages, gold was frequently used to create religious art, showcasing its ornamental and symbolic significance. Later on, during the Renaissance period, gold became a widely accepted medium of exchange, which continued into the 19th century.

The discovery of gold in California led to a surge in gold mining, making it a primary metal used in currency. In 1795, the United States minted its first official gold coins, and many countries used the gold standard into the 20th century (for example, the UK left in 1931 and the U.S. ended dollar–gold convertibility in 1971), which pegged the value of paper currency to gold.

While the gold standard is no longer in use, gold investing remains popular among many individuals and institutions today.

Uses

Gold's unique properties make it incredibly useful beyond its aesthetic appeal. As a conductive metal, it’s widely used in the electronics industry to create components for computers, cell phones, and other devices. It’s also a popular metal for jewelry-making due to its lustrous shine and malleability.

In dentistry, gold is commonly used to create dental crowns, bridges, and other appliances due to its biocompatibility and durability. Those same characteristics also make gold useful in the medical field in niche radiation therapies (e.g., Au‑198 brachytherapy) and as a component in implants.

Gold's properties also make it ideal for use in aerospace engineering, where it is used to manufacture components for satellites and spacecraft due to its infrared reflectivity (for thermal control) and corrosion resistance.

In addition, gold has a long history of use in bullion and coinage, where its value and rarity have made it a popular form of currency and investment. Beyond these practical applications, gold is also commonly used to create awards such as medals and trophies, as a symbol of achievement and excellence.

Value

Gold is known for its enduring value and is often seen as a hedge against inflation and economic uncertainty. The price of gold is influenced by many factors, including supply and demand, the value of the US dollar, and geopolitical events.

While the gold price today can be volatile, it has historically performed well over the long term. Today, many investors see gold as a way to diversify their portfolios and protect their wealth. If you're looking to invest in gold, there are several ways to do it. One of the best ways to buy gold is in the form of gold bullion or gold bars, which can be purchased from reputable dealers. Another option is to invest in a Gold IRA, which allows you to hold physical gold in your retirement account if the bullion meets IRS fineness standards and is held by a qualified custodian; home storage is not permitted.

Silver

History

Silver has been used by civilizations throughout history, with early mining and trade across the ancient Near East, including Anatolia (modern Turkey). The Phoenician cities minted silver coins by the 5th century BCE, and it was widely used for trade. In ancient Greece and Spain, silver was minted into coins and was considered valuable.

During the Middle Ages, silver was a prominent material in the creation of religious objects, and in colonial America, it played a crucial role in the economy. The discovery of vast silver deposits in South America by the Spanish colonizers in the 16th century resulted in the silver standard being used as a medium of exchange across many countries.

In the 19th century, the discovery of the Comstock Lode in Nevada, USA, led to a significant increase in silver production. However, its role as currency came to an end with the adoption of the gold standard.

Today, most silver is mined in countries such as Mexico, China, and Peru, and it is primarily used in industrial applications such as electronics, solar panels, and medical equipment. Despite its diminishing use as a currency, silver remains a valuable and sought-after metal.

Uses

Silver's unique physical and chemical properties make it a valuable metal for a wide range of industrial applications. It is a good conductor of electricity and is widely used in the electronics industry to make components for electronic devices such as cell phones, televisions, and computers. Sterling silver, which contains at least 92.5% silver, is commonly used in jewelry and silver tableware, where appearance is important.

Additionally, as silver has antimicrobial properties, it is used in the medical field to make wound dressings, surgical instruments, and medical implants. In the automotive industry, modern catalytic converters predominantly use platinum‑group metals (platinum, palladium, rhodium); silver catalysts are niche or research applications.

The reflectivity of silver makes it ideal for use in mirrors. Silver coatings are utilized in the production of printed circuits, while silver bromide and iodide have played a crucial role in the history of photography due to their light sensitivity. Despite the emergence of modern digital photography, silver salts remain significant in creating high-quality images and safeguarding against unauthorized replication.

Value

Silver has unique value propositions that make it an attractive investment option. However, it has a lower price point than gold, which makes it more accessible to a wider range of investors.

The price of silver is influenced by factors such as supply and demand, economic and political conditions, and fluctuations in the value of the US dollar.

Platinum

History

Platinum is a precious metal that has been highly valued since ancient times. The word "platinum" is derived from the Spanish word "platina", which means "little silver". The metal was first discovered in South America by Spanish explorers in the 16th century. However, it was not until the 18th century that platinum was recognized as a distinct element. Today, the majority of the world's platinum is mined in South Africa and Russia.

Uses

Platinum’s unique characteristics make it suitable for diverse applications. In the automotive sector, platinum is widely used in catalytic converters to reduce harmful emissions from car engines. The metal's chemical properties make it effective in converting toxic pollutants into less harmful substances.

Platinum is also valued in the jewelry industry due to its rarity, durability, and appearance. It is often used to make high-end and luxury jewelry pieces. Platinum’s resistance to tarnishing and corrosion also make it a highly sought-after material for jewelry.

Additionally, platinum finds extensive usage in the chemical and petroleum industries. Its high melting point and resistance to corrosion make it suitable for use in laboratory equipment and chemical processing plants. Platinum's catalytic properties are also useful in the petroleum industry, where it is used to refine crude oil into various useful products.

Value

Like other precious metals, platinum is valued as an investment and is considered a good way to diversify your portfolio. While platinum's market price can be volatile, it has different demand drivers than stocks and bonds, and correlations vary over time, making it a useful addition to investment portfolios.

The metal's high value is also driven by its use in a variety of industrial applications, which provides stability to its price. However, investors interested in physical platinum must consider other costs such as storage, which can impact investment returns. Finally, you should note that platinum isn’t as easy as other metals to sell, especially in physical form.

Palladium

History

Palladium is a rare precious metal that was discovered in 1803 by William Hyde Wollaston, a British chemist and physicist. It was named after the asteroid Pallas, discovered two years earlier. Palladium has a silvery-white color and is a member of the platinum group of metals, which includes platinum, rhodium, ruthenium, osmium, and iridium.

Uses

Palladium's durability and resistance to corrosion make it a popular choice in the production of electronic and industrial parts. It is also used in dentistry, medicine, chemical reactions, groundwater treatment, among other areas.

One of the most significant industrial uses of the metal is in catalytic converters, where it serves as a catalyst that speeds up chemical reactions and converts harmful emissions from car engines into less harmful substances. Its ability to facilitate chemical reactions without being consumed in the process is due to its ability to bond with other elements easily. This property makes it valuable in hydrogen fuel cells, which produce electricity without emitting pollutants.

Palladium's chemical properties also make it ideal for jewelry production. It is alloyed with gold to create white gold, which is more durable than traditional gold. For this reason, it’s a better choice for use in jewelry that will be worn frequently.

Value

Palladium’s value is determined by supply and demand. Most mine supply comes from Russia and South Africa; other producers include Canada, the U.S., Zimbabwe, Finland, Australia, and China. The demand for palladium is primarily driven by the auto industry, as it is used in catalytic converters to reduce emissions. Prices rose sharply in the late 2010s on tight autocatalyst supply and higher loadings; since 2022, substitution toward platinum and growth in EVs have weighed on demand. While palladium is a suitable portfolio diversifier, its lower liquidity can make its price more volatile. Volatility can result in rapid price swings both up and down.

Conclusion

Investing in precious metals can be a way for those looking to diversify their portfolio, but it involves risks, costs, and potential tax considerations. It is encouraged to invest in a mix of precious metals to mitigate risk as they all have unique characteristics and therefore, uses. If you’re uncertain, work with a trusted investment advisor to give you guidance on which investments align with your overall financial goals.