Precious Metals: Investing In Gold, Silver, Platinum, Palladium

by humagaia

Precious metal investing should be considered for any balanced investment portfolio strategy. Gold, silver, platinum and palladium are available for investment in many forms.

Precious metal investing is not just about buying physical gold, silver, platinum, palladium and others. There are a wide range of investments from mining stocks / shares through to precious metal futures that can be considered, to give an exposure at the level of risk / reward appropriate for your investment needs.
Investing in precious metals can be as a hedge against the worst effects of inflation and the devaluation of fiat money. It can equally be as a speculative investment taken to achieve short term gains. In either case, the fact that these precious metals have intrinsic value should be one of your considerations. Investments in the physical form will never become bankrupt.

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Precious Metals In Your Investment Strategy

Gold and the other precious metals such as silver, platinum, and palladium may play two roles in your investing strategy:

  • As a small core holding in your portfolio
    to play the role of an 'insurance policy' or 'disaster hedge'.
  • As an investment
    You may buy a gold mining company stock / share like any other.
    Or as speculation, offering the chance for large profits (or losses), due to the high gearing available in precious metals trading, and the sometimes volatile nature of the markets.

The Fundamentals Of Precious Metals Investing

Precious Metals As A Hedge Against Disaster

As a disaster hedge, investing in gold and other precious metals assists you to create a balanced portfolio that will enable you to survive and prosper in all types of economic climate.

One of the key investing skills is the ability to combine a mixture of 'defensive' and 'aggressive' securities to arrive at your own balance of risk and reward.

Wise investors throughout history have always kept a portion of their assets in gold. It was, and still is to some extent, viewed as a hedge against widespread economic or social collapse.

Today you will still find a small percentage of gold or gold-backed assets in most sophisticated portfolios. The major reason for this is that traditionally, gold has moved in tandem with fears of inflation.

Historically gold has been the currency of fear.

Whenever investors lose confidence in paper currencies (fiat money) they turn to gold as the one true measure of wealth.


Your Investment Routes Into Precious Metals

Apart from investing directly in gold or silver bullion, you have the folllowing routes into precious metals investing:

  • Coins
    You have to decide whether to elect for collector (high premium) coins, or bullion coins, with a low premium over gold.
  • Metal or mining stocks / shares
    If you invest in stocks / shares of mining companies you'll need to choose which ones:

South African

  • Open-ended Investment Funds
    (U.S. Mutual Funds, UK Unit Trusts and OEICs, European SICAVs, Exchange Traded Funds)
    A number of these are available specializing in precious metal-related investments.
    Primarily they concentrate on holding stocks / shares in gold and other precious metals, and mining companies. They offer you the opportunity to participate in this sector without the burden of day-to-day management of your portfolio.
  • Futures
    In which you take an option on the future movement of prices, without actually taking delivery of the metal.
  • Commodity Funds
    Open-ended funds investing in specific physical metals, or commodity futures.
    SIB regulations permit this.

Gold, Silver, And Diamond Investing


If you are a nest-egg investor you will have difficult decisions to make at times.

High interest rates may accompany political and economic uncertainty, so your two reasons for holding gold are at odds with each another.

What is more, times of uncertainty may cause a rush into gold, pushing up its price: this may induce you to sell to make a capital gain.

Investing in gold, silver, platinum, palladium and other precious metals has always been a strategy for balanced investment portfolios and you should consider it to be included in yours.

Updated: 02/06/2021, humagaia
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blackspanielgallery on 06/10/2016

Opting for greater purity in coins, such as fine ilver instead of Sterling silver seems to have some resale value. And if you do not mind voltility, platinum can occasionally be very tempting.

humagaia on 10/31/2012


sheilamarie on 10/31/2012

Tricky business, but worth investigating.

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