Once you move into precious metals investments, you are confronted with the question of which will be the best target for your investments. Gold gets most of the press but the truth is that all of the precious metals are good investments.
Many investors in these commodities diversify their holdings and keep several, if not all of them, in their portfolios. Where you decide to concentrate most of your investment depends on personal preference and on the goals that you have for your assets.
It is not just the beautiful luster of this metal that brings in the investors and writes the headlines in the news. People are attracted to gold because of its strong price performance over the last ten years. Just as in the 1970s, when inflation began to run away, investors have shifted an immense amount of financial resources into gold and gold-related financial instruments.
Gold makes sense as a long-term investment because it famously acts as a hedge against inflation. Gold exists in a finite quantity that changes little over time. Gold mines can only extract so much from the ground each year and much gold is also consumed and lost in industrial processes that manufacture electronic devices.
Paper currency, on the other hand, can be printed endlessly. Every time that the US government prints money under the guise of quantitative easing, the price of gold naturally gets a boost.
This precious metal is priced in US dollars and inevitably acquires more value in that currency as more dollars come into existence. As long as the US continues to manage its financial affairs without adherence to the gold standard, which it abandoned in 1971, then you can expect the market value of gold to continue increasing. As of November 2012, the price of an ounce of gold is more than $1,700.
However, there are reasons that everyone has not put all of their investment eggs in one golden basket. While gold has performed extremely well over the last few years and made many investors rich, few people think that this type of extraordinary performance can continue.
Many people think that gold may have reached a plateau. It is a good investment for preserving your wealth but it may not be the money-maker that it was in the past. If you are looking for something to generate earnings and wealth in a short period of time, then you may want to look at some of the other precious metals.
Silver is the often-overlooked cousin of gold on the market today, even though it too has performed very well in the recent past. Not too long ago, silver was priced at just $4 per ounce.
At the end of November 2012, it is priced at more than $34 per ounce. While new investors in precious metal may ignore silver due to its lesser value per ounce, more experienced buyers are shifting toward it for several reasons.
Price-per-unit is a major factor in considering investment in any asset. The actual value is of little importance when compared to the proportion of its gains. That is why low-priced stocks have more potential for generating large earnings.
The same theory holds true for precious metals. It is hard to imagine gold repeating its gains of over 500% anytime soon. That would vault the price into the range of $8000 or more. Silver, however, could easily make the same sort of price surge.
In fact, silver has historically had a much closer relationship with gold than it does not. The ratio between their values has more typically been something like 20 or 25 to one. The unusual thing about the present situation is that gold is worth 50 times more than silver.
If gold is fairly priced, and there are mountains of evidence to reinforce that idea, then silver stands a good chance of moving forward to reestablish a more normal ratio with its more expensive cousin.
That could mean a doubling of the market value of each ounce of silver. Wealthy investors such as Jim Rogers have already noticed this likelihood and have moved significant portions of their investments into silver and silver ETFs.
There are other members in the precious metal club, though they are often unknown or forgotten. Many people have probably heard of platinum without identifying it as a precious metal.
It is actually the leading member of an entire class of precious metals that do not exist in quantities as great as gold and silver do. However, these other precious metals do share many similar qualities.
Platinum was only made known to most of the world after the Spanish encountered South American Indians in possession of it in the 16th century. They named it little silver because its luster is similar to that metal. Platinum is now used in catalytic converters for automobiles.
Historically, platinum has always been worth more than gold. During the last year, it has undergone some volatile movements. At the end of November 2012, the price has risen to over $1,600. If it is going to regain its superior price in comparison to gold, platinum will make a significant surge in the near future.
All of these metals are in demand for various industrial processes. As commodities, they are obviously good investments because demand is so high and is likely to remain that high. Instead of choosing one, it is easier to invest in all of them.