Investors Eye Other Precious Metals for High Prices

In 2024, the price of gold has been rising rapidly, setting a new record in late May. According to figures from the World Gold Council, gold prices have increased by around 13.5% this year until early June, even if they have dropped slightly below the $2,400 per ounce threshold.

Investor worries about inflation and the state of the economy have contributed to these recent price hikes. Nonetheless, given that gold prices are almost at all-time highs, some investors could question if it still makes sense to invest in gold or if it would be wiser to look into other precious metals that are perhaps more obscure.

Yes, gold prices are high, but that doesn't necessarily mean investors should avoid gold in favor of other precious metals, according to experts.

Case for Investing in Gold

Although the current price of gold is near its record high, it may not be as elevated as it seems once inflation is considered. Dr. Roger D. Silk, founder and CEO of Sterling Foundation Management, explains that while the price of gold is near historical highs in nominal terms, its inflation-adjusted value is still below its peak in 1980.

Additionally, evaluating gold solely based on its price may not be sufficient to determine its investment value. Instead, investors should consider how gold integrates into their overall portfolio.

Silk points out that many portfolios comprising stocks and bonds could benefit from including up to 10% gold. This is because gold has historically provided diversification, allowing a portfolio with gold to achieve a higher expected return for the same level of risk compared to a similar portfolio without gold.

Investing in Silver

Besides gold, investors might consider silver as a viable precious metal investment. Historically, silver often follows gold's significant rallies, sometimes achieving greater percentage increases in the subsequent months. If this pattern continues, silver could be a strong investment in the near term.

However, basing investments solely on silver's price can be risky. It's important to consider the underlying reasons for investing in silver. Unlike gold, silver has more industrial applications, making it potentially attractive for different reasons. Investing with this in mind may require advanced knowledge, so ordinary investors might instead focus on broader economic factors.

As monetary precious metals, gold and silver both tend to do well in times of inflation, geopolitical unrest, and economic instability.

Considering Other Precious Metals

While other precious metals might seem appealing in the current environment, it's crucial to understand the specifics of these investments. With the rapid rise in gold prices, metals like platinum and palladium are gaining attention from investors. However, investing in these metals just because they are grouped with gold and silver can be risky.

Unlike gold and silver, other precious metals do not necessarily serve as stores of value during times of uncertainty. For instance, the demand for platinum and palladium is largely driven by their industrial applications, making their prices more volatile due to fluctuations in industrial use.

Palladium, for instance, surged to around $3,000 per ounce in March 2002 but has since dropped below $1,000 per ounce. Platinum has fluctuated between approximately $700 and $1,200 per ounce since early 2015. Similar volatility is observed in metals like ruthenium, iridium, rhodium, and osmium, driven by niche market factors.

Given this volatility and the lack of a consistent relationship between these metals and gold, it may be wise to avoid investing in them unless you have specialized knowledge. Sticking to investments you are more familiar with could be a more prudent approach.

Gold and silver have a well-documented history as reliable stores of value during economic distress and monetary instability. However, the price and liquidity of other precious metals are influenced by factors related to their scarcity and industrial uses, which can be complex and are typically well understood only by those deeply involved in mining or trading these metals.

Some experts even suggest that silver, like other industrial metals such as platinum and palladium, requires specialized knowledge for effective investment. As a result, it might be best for non-professionals to avoid investing in these metals and focus on more familiar options.

The content provided on MoneyTimes.com is for informational purposes only and is not intended as financial advice. Please consult with a professional financial advisor before making any investment decisions.