Precious Metals
With stock markets beginning to show fear of recession, the risk of a major market correction is growing every day. And with a bubble as big as the Federal Reserve has blown, the next crisis could be even bigger than 2008.
Many individuals are nervous about the status of their portfolios, particularly those who have benefited the most from recent gains in the market. They’re looking for any opportunity they can to safeguard the gains they’ve already made and keep from suffering huge losses.
The financial crisis of 2008 resulted in stock markets losing more than 50% of their value, while many suffered losses even worse than that. Many people today remember those losses, and they’re determined not to repeat them.
Many people also remember the performance of precious metals in the aftermath of the 2008 crisis, as metals like gold and silver catapulted to record or near-record highs. The question most people have today is, what is the best precious metal to purchase right now?
Precious metals markets are far different today than they were 10 or 20 years ago, and the number of options available is significantly broader too. So what is the best metal to buy, and what are some of the best ways to buy it?
Precious metals are rare, naturally occurring metals in the earth’s crust that have high value due to their uses, whether as portfolio assets or in industry. Both because of their rarity and their use in coinage, jewelry, and industry, precious metals have values far higher than base metals such as steel and copper.
While everyone is familiar with gold and silver, they often overlook the other precious metals, those in the platinum group: ruthenium, rhodium, palladium, osmium, iridium, and platinum. So what is the best metal to purchase right now? Here are four precious metals that can be popular assets.
When people think of owning precious metals, their first thought is almost always gold. Gold has captured the imaginations of people across the world for millennia, serving as a currency, a store of value, and a highly popular asset.
There’s a reason people refer to certain benchmarks as a “gold standard” – because gold is the object against which every other good has always been valued. Gold’s ability to maintain its value over time is legendary.
Just look at the difference between a $20 gold piece and its contemporary $20 bill. That $20 bill is still worth $20, while the $20 gold piece will net you about 125 times that much.
But gold isn’t just a source of stability or diversification for a portfolio. It can also be a source of potential wealth appreciation. Gold has been one of the best performing assets of the 21st century, with a growth rate even surpassing that of stock markets.
With financial markets beginning to take the threat of recession seriously, it’s no wonder that so many people are starting to buy gold to help protect their assets. And for those who want to try to protect their tax-advantaged retirement accounts, you can even take advantage of a 401(k) to gold IRA rollover to buy gold.
A gold IRA allows owners of tax-advantaged retirement accounts such as a 401(k), 403(b), TSP, IRA, or similar account to roll over those funds into an IRA that owns precious metals such as gold. That gold IRA offers the same tax advantages as any conventional IRA, but with the added protection that owning physical gold coins or bars can offer.
All that glitters is not gold, as silver buyers know well. While silver often plays second fiddle to gold, it’s an important metal in any portfolio.
During precious metals bull markets, silver’s gains can often outstrip those of gold. After the 2008 financial crisis for instance, silver more than quintupled in price from its 2008 lows to its 2011 highs, while gold only nearly tripled.
The silver price and market is different from that of gold because silver is much more heavily used in industry than gold. Roughly half of all demand for silver normally comes from industry, whether it’s from electronics, dental equipment, or increasingly the solar panel industry.
Industrial demand for silver is forecast to increase in the future, while silver supply has been falling for several years. Because most silver is produced as a byproduct of mining for gold, copper, and other metals, decreases in mining activity for those metals can result in decreased production of silver too.
With tightening supply and rising demand from both individuals and the solar industry, the stage is being set for a silver price breakout.
Like gold, silver can be purchased through an IRA. A silver IRA allows individuals to hold silver in an IRA and enjoy all the same benefits of a tax-advantaged retirement account, while simultaneously owning physical silver coins or bars.
Platinum is the third-most popular precious metal among precious metal owners today. If you’re wondering what the best metal to purchase, platinum could be right up there.
Platinum’s history isn’t as long as that of gold, although the metal has existed for millennia. But it was only in the 18th century that scientists were first able to separate platinum from the other precious metals with which it was commonly found in mines.
The platinum industry took off after that, with the metal’s durability and resistance to corrosion making it a favorite of jewelers, watchmakers, and other industries.
Roughly half of platinum produced today is used in automotive catalytic converters, its primary industrial use. A large portion of platinum is used in jewelry, and the remainder is used for electronics and in various other industries that need platinum’s resistance to corrosion.
Compared to silver and gold, very little platinum is minted into coins and bars, but those coins and bars are available from mints around the world. Platinum prices haven’t moved nearly as much as silver and gold have in recent years, with decisions in the catalytic converter industry being among the major influences on platinum prices.
Over 80% of platinum production today comes from South Africa, with Russia and Zimbabwe taking the second and third spots. That concentration of production can lead to fears of supply disruption in case of unrest in Africa.
But that also could mean that the platinum price could rise significantly in the event of such a disruption. The platinum price has underperformed in recent years, but It’s hard to imagine platinum becoming any cheaper than it already is.
Many years ago platinum was actually worth more than gold, and for all we know it may very well get there again. Years from now people may look back and kick themselves for not buying platinum when they had the chance.
Only discovered in the early 19th century, and once of limited use primarily in jewelry, palladium has seen significant price movement in recent years. Like its sister, platinum, palladium finds one of its primary uses in the automotive industry in catalytic converters.
Similar to platinum, palladium’s production is concentrated in only a handful of countries. Russia and South Africa are the top two producers, with Zimbabwe, the US, and Canada producing lesser amounts of the metal. Supply disruptions and use by the automotive industry are two major drivers of the palladium price.
Supply disruptions from Russia in the early 2000s caused the palladium price to spike above $1,300 an ounce. But by the time the 2008 financial crisis rolled around, palladium had fallen back down to a few hundred dollars an ounce.
Palladium’s lower price vis-a-vis platinum caused numerous auto manufacturers to use it instead of platinum in their catalytic converters. And that increased demand significantly.
The threat of supply disruptions in the aftermath of Russia’s invasion of Ukraine caused the palladium price to skyrocket, reaching over $3,400 at one point in early 2022. But the risk of palladium sanctions never materialized, automakers drew down their palladium stores, and the price has now fallen to below $1,000 an ounce.
With less geopolitical risk and the ability to switch out palladium for platinum in catalytic converters, there isn’t much right now that could boost palladium demand. But if further sanctions on Russia target palladium production, the palladium price could see a boost.
With so much of the palladium supply dependent on production in Russia and South Africa, and geopolitical squabbles threatening those supplies, those betting on a lower palladium price may end up wrong, to the benefit of those who own palladium.
While the four metals above are the most commonly known precious metals to own, rhodium deserves an honorable mention. It’s really the only other precious metal for which there is a liquid market, which is again, like platinum and palladium, largely due to its use in catalytic converters.
About 80% of rhodium is used in the automotive industry and, like platinum, South Africa is the world’s largest producer. That supply issue has led to a number of surges in the rhodium price over the years, with rhodium hitting an all-time high price of nearly $30,000 an ounce in 2021.
While the rhodium price has since crashed back down to around $4,500 an ounce, that is still multiples higher than the $625 it was trading for in 2016. And there’s no telling when supply disruptions could boost the rhodium price yet again.
But rhodium doesn’t make our cut when it comes to considering what the best metal to own is for a couple of reasons. The first is because of that significant price volatility.
Unlike gold and silver, which see relatively stable long-term price growth, and which can thus benefit those who want to hold assets for the long term, rhodium seems more suited to speculators looking to make a quick buck on sharp price movements.
While there were certainly great gains to be made when rhodium was soaring, there was also the potential for severe losses. Rhodium also isn’t readily available in coin or bar form, so purchasing it isn’t nearly as easy as the four top precious metals.
Rhodium also isn’t an IRA-eligible precious metal, which can make it more difficult to acquire as an asset. While IRAs are generally prohibited from owning any metals or coins, there are specific exemptions for gold, silver, platinum, and palladium, but not for rhodium.
Gold, silver, platinum, or palladium bullion that meets minimum fineness requirements for futures contracts is eligible to be acquired by an IRA. That means you can add physical gold coins or bars, silver coins or bars, platinum coins or bars, and palladium coins or bars to a precious metals IRA. But rhodium gets left out.
If you want to know what the best metal to hold, you’ll have to judge that according to your own financial or retirement goals. For many, gold is going to come out on top every single time.
Gold has the benefits of long-term price growth, a good risk to reward ratio, and one of the best track records of any of the precious metals. If you’re looking to safeguard your financial well-being for the long haul and looking for wealth protection for years or decades to come, gold is going to be hard to beat.
But other individuals may decide that they can afford a little more risk. They might like the additional potential upside to holding silver, particularly when they see that silver is incredibly undervalued right now.
Others may want to put a small percentage of their funds into platinum or palladium, adding even more diversification even though it does increase their risk profile. At the end of the day, it’s up to you which metal is the best to purchase.
With years of experience helping thousands of customers just like you purchase precious metals, the experts at Goldco are ready to assist you with any questions you have and walk you through the precious metals purchase process.
Our commitment to quality products and superior customer service has made us one of the top gold companies in the country, and our more than 6,000 5-star reviews are a testament to that.
If you’re interested in putting precious metals to work in safeguarding your retirement savings, call Goldco today.
This article was originally published in July 2020 and was updated in September 2024.
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DISCLAIMER: This site is general in nature and not tailored to the specific goals of any individual. All investments carry risk. Some of those risks associated with precious metals include the following: prices may rise and fall, which means the value of your metals may go up or down over time and you may sell for more or less than you paid. Past performance does not guarantee future results. Goldco cannot guarantee, assure, or promise future market movement, prices, or profits. Even though Goldco and its representatives are precious metals specialists, we are not licensed financial advisors and do not give financial advice. Additionally, Goldco cannot provide tax or legal advice and will not advise as to the tax or legal consequences of purchasing or selling precious metals or opening a Precious Metals IRA. Individuals should consult with their investment, legal or tax professionals for such services.
