Precious metals have offered a hedge against various investment options for a long time, and continue to do so even now. They experience minor fluctuations in the short term and provide decent returns in the long run. The beauty of investing in them is that they don’t lose value even during an economic or global crisis.
If you’ve already invested in gold and are looking for opportunities to invest in platinum and other precious metals to diversify your portfolio, this might be the right time to start.
Precious metals are considered hot investments, with silver breaking its 7-year high of $29.14 per ounce in August 2020, when the world was waging war against the pandemic. If you are diversifying your investments to incorporate precious metals, these are the top five to watch out for.
Gold, apart from being used in jewellery and ornaments, is an alternate currency in the global financial system. Gold prices depend on a lot of variables, not just demand and supply.
Not just that, it offers protection against economic downturns, and several major currencies are pegged to it. For retail investors, gold is available in various forms and denominations.
You can invest in it through jewellery, coins, bars, or ETFs. Gold is demanded more by the industrial sector due to its non-corrosive properties. The global demand for jewellery is over 2000 tons per year, and the supply is subject to various factors, making it more valuable.
Silver recorded a return of 44.6% during 2020, while U.S. markets gave a return of 14.6%. The reason for this stark difference is that risk-averse investors have traditionally preferred precious metals over other investments during a crisis. The demand for physical silver touched 65% in 2020, and prices soared due to the shutdown of mines during the first half of 2020.
Now that mining is in full swing, manufacturers will compensate for their losses by churning out more silver for eager investors. The total demand for silver is about one billion ounces per year, half of it coming from industries. Therefore, silver offers a solid investment opportunity.
Rarer than gold and silver, opportunities to invest in platinum should not be missed. Available in coins, bars, and jewellery, platinum is gaining momentum and will soon match the pace of gold and silver. The annual production of the metal stood at about 170 metric tons in the year 2020, and the auto industry used about 40% of it. As demand for vehicles increases, so will the demand for platinum.
A low-cost alternative to platinum, palladium has quickly become a favourite investment. The auto industry is the biggest consumer of the metal, and investors can bet on this demand to rise and, therefore, prices to increase.
Most people may not consider copper a precious metal, but the metal is proving people wrong. Due to its industrial and medical uses, the metal will prove a worthy long term investment in your portfolio.
When it comes to investing in precious metals, you can’t go wrong. The metals, as mentioned earlier, are expected to see a surge in demand from various industries and therefore offer a great investment opportunity in 2021.