For many novice investors, the investment outlook for precious metals has never been worse. They may fondly recall the times when gold was trading at well over $1,800 per ounce and silver was trading at around $40 per ounce. Now, they look at the prices and see gold in the range of $1,300 an ounce and silver trading at below $20 per ounce.
The average investor has a tendency to overreact in the worst possible way in these cases, selling the stocks when they are low and waiting for a big run up to buy in when it’s too late to recoup those losses. Remember that it is always your goal to buy low and sell high, and take advantage of opportunities when prices are low.
Right now the prices for precious metals are so low that even with a lukewarm investment outlook for precious metals, there is an opportunity to profit off a purchase in precious metals.
The key right now is to be able to look toward the investment outlook for precious metals with an eye for the long-term. It is hard to imagine gold and silver trading this low forever, and it is also hard to imagine them going much lower than they already are. As a result, it is a pretty good buy to get them at these prices and then ride it out until they make something of a comeback. Even if it takes years, a comeback to $1,800 per ounce for gold is a profit of nearly 40 percent, while silver would have to double to get back to its old highs. That’s a pretty promising long-term investment outlook for precious metals. You just need to have the stomach to ride it out.
Investment Metals versus Industrial Metals
Right now, there is a big difference between investing in gold and silver or platinum and palladium. Gold and silver tend to get a lot of their value from investors, as they are less commonly used in industry. As a result, they are prone to more dramatic swings. Gold in particular is known for a lot of volatility based on what is going on in the stock market. As a result, these two metals are probably the better buy for a long-term outlook, as the prices have swung pretty low.
However, the short-term investment outlook for precious metals may be more favorable for platinum and palladium. They get a lot of their value from industrial uses, given that they are used in many different industries. They are found in catalytic converters, which means that they are found on almost every automobile. That provides a lot of demand, driving prices upward as more and more cars hit the roads in developing countries.
It is a good idea to diversify your investments, even within precious metals, so that you are exposed to more than one investment outlook for precious metals.
However, things may change a bit in the future. As the electric motor is more commonly found in automobiles due to a desire to slow the use of gasoline, catalytic converters will be decreasingly common. At the same time, the industrial demand for gold and silver is growing due to their conductivity. With more and more consumer electronics being manufactured and sold, the industrial demand for all precious metals should only be on the rise. That could lead to increased stability in gold and silver prices in the future.
For now, though, their outlook continues to be focused primarily on investors, while platinum and palladium draw their value from industry.