If you are planning to invest in precious metals, you must be wondering whether to invest in gold, silver, or other precious metals. There is no doubt that nothing can beat gold and silver when it comes to the best-known precious metals. Gold is widely used as an investment by central banks and big financial institutions. In fact, many retail investors also use it as a store of wealth worldwide, and most people consider it superior to paper currency.
Silver is also widely seen as a good investment when it comes to precious metals. One of the most significant differences between gold and silver investments is that silver is widely used in various industrial applications. In fact, it is estimated that more than half of the annual supply of silver is meant for industrial applications. In contrast, less than 1/8 of the yearly supply of gold is intended for any industrial application.
Is Gold the Best Precious Metal?
When you look at precious metals from a return perspective, you will find that no other metal has as long an investment history as gold. After all, when paper currencies were first introduced economies, these were backed by gold. In short, it has a lot of history when it comes to investment asset classes. Silver also has a long history, but it is not widely seen as an investment asset.
Global investors also eye various other precious metals. Some of the common examples include platinum, palladium, and copper, among others. These metals should ideally form part of an ideal investment portfolio where a significant amount of the portfolio is invested in precious metals. In a perfect scenario, a substantial portion of your investment money should be invested in precious metals in addition to investments in stocks, bonds, CDs, and mutual funds. The most significant advantage of investing in precious metals is that you make your portfolio more diverse, and that should protect your portfolio in times of economic downturn.
As far as distributing your investment in precious metals is concerned, you should take a close look at the historical increase in the prices of various precious metals such as gold, silver, platinum, palladium, and copper to divide your portfolio among these metals adequately. There is historical evidence to suggest that the price of gold has continuously increased during economic downturns. Take the example of the 2008 financial crisis, and you’ll find that gold had given the highest return to investors even when stocks were wiped out and interest rates on bonds and CDs were almost negligible. Similarly, the return on investments in silver has also been good. Investment in silver has returned more than investment in gold if you compare a specific period. Therefore, you cannot say with certainty that gold is the best precious metal for ROI.
According to this Augusta Precious Metals review, while gold does not provide the best returns compared to other metals, there is one other thing you need to consider before buying any precious metal, and that is volatility in the prices of these metals. The gold market is enormous, and the main reason for this is the high prices of gold. On the other hand, other precious metals such as silver, platinum, and palladium are good assets, but they also witness high volatility. The price of silver is highly volatile as most of it is used in various industrial applications. If there is an economic downturn, the demand for silver will obviously go down, which should affect its price.
Similarly, other precious metals such as copper and palladium are also widely used in a variety of industrial applications, and their prices are also closely linked to the global economy. On the other hand, the price of gold hasn’t shown as much volatility as the prices of other precious metals. In short, it won’t be wrong to say that gold is much less volatile as compared to other precious metals.
Also, gold is likely to outperform other precious metals in the long term. Therefore, if you’re planning to park your money for long-term (more than 5 years), it makes sense to invest most of it in gold. Even if it does not outperform other investments, you can rest assured that you won’t lose money as gold prices will always go up in the long term. You can hold on to your gold investment and be sure that you will never lose money.