Precious Metals That You May Not Have Considered Investing In
Gold has long been a strong favorite for investors looking for a commodity that will retain its value, especially when national currencies are on the slide. However, with so much attention fixed on the price of gold, there are a number of other opportunities to invest in precious metals that may have slipped under your radar.
Rhodium
Rhodium is similar in many ways to its close cousin on the periodic table, platinum. There’s one important difference however; it’s significantly rarer. It has several industrial uses, including connections in electronics, catalytic converters and in turbine engines.
As its demand is tied to specific industries, it has the potential for volatility. This potential is fulfilled by the other half of the price equation; supply. With rhodium being so rare and available in so few places (supply comes mostly from South Africa and Russia), prices can be thrown massively by events in those countries. In the past, Russia has flexed its muscles on the world stage by practicing resource nationalism and restricting shipments on products like palladium, for instance.
In general, being such a scarce, finite resource, you’d expect prices to keep rising, and as rhodium hasn’t been picked up on much by traders and speculators, its price is basically based entirely on it’s scarcity. Unlike gold, market sentiment is not part of the equation.
Silver
Like gold, silver is an asset that’s value is respected across borders and isn’t linked to currencies, helping to retain its value over time due to its relative scarcity. Therefore, just like gold, it is often used in portfolios to mitigate a bit of risk in times of widespread economic turmoil.
However, in comparison to gold, silver is much more volatile. This is due to demand for silver being more flexible, as silver’s function is less monetary than gold. It is used in a number of different industries and therefore consumed. Whereas pretty much all the gold that’s ever been mined still exists above ground in bullion or some other valuable form, silver is used up and disappears.
The combination of silver’s use as investment tool dependent on market sentiment and a useful material, dependent on industrial demand means its price moves around further and quicker than gold, the good news being that it tends to lead gold in a bull market.
Platinum
Platinum is one of the rarest metals out there, far rarer than either gold or silver. However, it often trades at a lower price than gold. Of course, there are several reasons as to why this should be. Chiefly it’s because platinum is really not a monetary metal, where as gold always has been. People turn to gold when they fear that inflation will eat away at their other investments, so, in times like these, demand is high.
Demand for platinum on the other hand, despite it being an attractive precious metal, often used in many similar ways to gold, is driven mostly by industry. 74% of its worldwide usage is accounted for by the automotive industry, with jewelry taking up the other 16%. Most platinum comes from South Africa, who provide 75% of the world supply.
As demand is fairly stable, it’s very important to look at the supply side when picking a good time to invest in platinum. Though, historically, it has tended to bounce back quickly after slipping below the price of gold, in 2011 it slipped down and continued to fall. As prices have started to slip below the cost of production, supply may be curtailed, leading to an eventual rise in demand. However, with most mines being based in South Africa, the continued slide of the rand has brought down the cost of production too, meaning prices may have a little further to fall before, in all likelihood, making a come back.
Byline: David Gregson writes about a wide range on investment opportunities. You can find more on his site, Elite Money.
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