If you are a relatively new investor, the precious metals outlook might be spurring you to consider investing in precious metals such as gold, silver, palladium and platinum. As the above article points out, projections are strong for almost all of the precious metals, which draw their prices from a combination of economic indicators, inflation rates, supply and demand. Here are some considerations for these factors with regard to each metal.
One of the biggest factors in the price of gold has always been the economic conditions and stability of currency. The worse the economy is, the better news that is for gold bugs. The less stable the dollar and the greater the fear of inflation, again, the more likely gold is to be rising in price.
Now, most of the global economy is either sputtering or regaining strength slowly, which is a positive indicator for gold. In addition, there are growing signs of inflation in Europe in addition to the United States. As a result, the precious metals outlook for gold is good.
Silver tends to lag behind gold but make similar movements, although at the moment it is trading much lower relatively to gold than history indicates should be the case.
Historically, silver has stayed within about a 14 or 16 to one ratio when compared to gold, but now gold is trading more than 60 times higher. That means that either gold is in for a crash or silver is in for serious growth, if you believe the speculators who say that ratio will work its way back into balance.
Since the indicators for gold are already positive, the gold crash seems unlikely. That means silver growth is even more likely.
In addition to the factors that influence gold and silver, palladium has supply and demand issues as a result of mining conflicts in some of the key countries that produce palladium and due to its growing use in electronics.
It is hard to imagine the number of electronics owned by the public decreasing, and our global addiction to technology and computers only seems to be growing stronger. As a result, palladium, which is used in electronic circuitry, should only grow in demand in the future. That figures to drive prices higher.
Since it is resistant to corrosion and a good conductor of electricity, palladium has gained popularity in this regard. Gold and silver are also used in these applications. Barring any surprising changes in trends with regard to technology, the long-term demand should be there for palladium, even if there is short-term volatility.
Platinum has many similarities to palladium and is also used in medical equipment and automotive parts. Due to its use in electronic circuitry and medical equipment, platinum seems to be at the unique intersection of two of the fastest growing sectors in the economy.
That is rarified air and a reason that the precious metals outlook for platinum is currently positive. Platinum also has uses in jewelry, which further serve to drive up the demand.
Investment Tools for Beginners
If you are new to trading precious metals, the best way to go is probably with an exchange traded fund that sets out to emulate the actual movement of the spot price of the given substance. While bullion might be the safest way to invest in precious metals, its price range is prohibitive for many investors and the simplicity of ETFs makes them a leading option for the time being.
As you gain more and more experience dealing with the precious metals outlook and related investments, you will be able to move on to different investment tools if you so choose.