Since the economic turmoil between late 2007 through the end of 2009, there have been few constants you can rely on regarding investments.
One that does exist is that building a portfolio that possesses some precious metals is a wise idea. What are the best precious metals to invest in, though?
While there is some debate about how much to invest, there are five precious metals virtually everyone says are good bets.
The following are the five best precious metals to buy in 2022 to build wealth, stabilize your portfolio, and be prepared for whatever comes next economically.
5 Best Precious Metal Investments
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What Are Precious Metals?
Precious metals are any metal deemed to be rare. Rarity is determined by how prevalent a metal is in its natural environment and how difficult it is to mine and separate into a solitary metal.
Many metals are part of an ore deposit, and extracting them can range from very easy to extremely difficult and even impossible.
If there is a “best precious metal investment” prize for the history of humanity, gold wins hands down. Gold is the Hallmark Christmas Movie plot of precious metals because it is predictable.
Even when the price per ounce is down, few investments come as close as gold to a sure thing regarding stability and return on investment.
That stability has earned gold the role of being one of the prominent standards of value. The best way to illustrate its strength is to compare a $20 bill to a $20 gold piece.
The $20 bill, discussions of the value of a dollar aside, is worth $20. However, a $20 gold piece holds a precious metal value that dwarfs its currency value.
Gold is not something you want to sink all your savings into because it can stagnate in price during good economic times and barely move for months.
Gold is, however, an investment that is highly recommended as a hedge against bad economic times because it is reliable, resilient, and always popular.
Another precious metal that serves as a potent hedge against economic challenges is silver. The best way to describe silver is that of the forgotten middle child.
Silver brings a lot to the table, but is not as flashy as its older sibling or as needy as the younger kids. As an investment, it is quiet, steady, and reliable.
Silver also tends to be more affordable than gold. When gold is on a hot streak, silver will also increase in value, sometimes outpacing gold in terms of its growth rate, but because it is less expensive at the outset, it remains affordable for most investors.
Silver also does not fluctuate in price as readily as gold. Working in silver’s favor is that while the principal value of gold is its perceived worth, silver has more industrial applications.
That can serve as a price driver, particularly when there is a perceived shortfall of quality silver. Silver gets used in multiple industries, and that demand helps silver remain constant, even when gold prices swing wildly.
Platinum is a newcomer to the precious metal investment portfolio. It is a newcomer because we did not figure out how to separate platinum from other precious metals until the 18th century.
That discovery, however, opened the door to using platinum in jewelry, watches, and industrial applications that needed durability and corrosion resistance.
Since then, however, platinum has become a vital part of many applications, most notably as part of the catalyst in catalytic converters.
It is also still used in jewelry as well as other electronics because of the corrosion resistance it is known for possessing. Platinum is rarely used in coins, making it difficult to own in a tangible condition.
Its price has been volatile over the last ten years primarily because of less demand from the auto industry. The demand reduction is because palladium has gradually replaced platinum in catalytic converters, even as palladium has become more expensive.
Complicating price stability is that over 80% of all platinum comes from South Africa. Political instability in that country has given rise to fears of supply disruption, which would significantly increase platinum’s price.
Because of the price decrease in recent years, platinum is considered an excellent investment for the long term.
Palladium was discovered in 1803 and is a Platinum Group Metal. Its relatively low density made it a favored metal in jewelry, and recently, it has become a principal metal used in making catalytic converters.
It is mined primarily in Russia and South Africa, which fueled a skyrocketing price on the precious metals market, a combination of use in the auto industry and the volatility of those two nations.
Since the early 2000s, palladium’s price has steadily risen, taking off in early 2020, reaching a high of over $2,500 per ounce.
Currently, palladium is valued at over $2,500 an ounce, making it more expensive than gold. Much of its pricing stability of late is its industrial use, a practice that shows no signs of letting up.
That trend is holding up even in the face of more expensive per ounce values primarily because the auto industry seems wedded to using the metal for the foreseeable future.
Rhodium is not a well-known precious metal, but when invested correctly, it is lucrative, although very expensive.
Its primary industrial application is catalytic converters. South Africa is the world’s largest producer, followed by Russia and North America.
Supply disruptions have kept rhodium’s price both volatile and rising. Most recently, the supply disruption is due to the war in Ukraine.
Before that, strikes in South African mines bolstered the price. The supply looks to be limited even further if sanctions on Russia continue.
Rhodium is not traded on any major exchange, although there are several OTC rhodium stocks you can buy.
The critical difference between rhodium and other precious metals is that it is scarce but vulnerable, as mentioned above, to world events.
It has a greater susceptibility because of its rarity. If, for example, sanctions on Russia last for a long time, the rhodium supply would take an immense hit until one of the other two producers could pick up the slack.
What is the Best Precious Metal to Invest In?
These five metals are all decent options if you want to invest in precious metals. If you want to manage your risk, we think these are the five best precious metals to invest in:
- Silver is the lowest risk, but an investment that provides a limited return
- Gold is a lower risk because of its constant desirability, although it can be volatile in price
- Titanium is a lower risk because it is not rare, but comes with possible production issues
- Palladium is a medium risk because it is stable, but expensive
- Rhodium is a higher risk because it is rare and limited in use, making its price volatile
Depending on the amount you can invest, any of these are potentially profitable, provided you can ride out the cycle of rapid but usually short-term fluctuations.
The two wildcards are palladium and rhodium because their use is limited, but have potentially profitable spikes in value, making them more of a quick investment rather than one for the long haul.
The best precious metal to buy if you’re looking for something stable with a near-guaranteed return is gold.
Gold is a precious metal that retains value in good economic times and bad, experiences slow increases and decreases in price, and is not so rare as to be unaffordable to the average investor.