What Is the Best Precious Metal to Invest In?

Buying precious metals can be an attractive option for anyone who wants to diversify their investment portfolio. Whether you’re seeking an alternative home for your retirement assets or want to hedge against rising inflation and other economic uncertainties, precious metals can make a lot of sense. 

Investors who want to buy precious metals have four main options: gold, silver, platinum, and palladium. While gold is perhaps the most prominent investment metal, the others offer compelling reasons to invest. But how do you know what precious metal works best for your financial situation? 

We’ll walk through the pros and cons of each of the four major precious metal investment options, including a cautious outlook on what the future might hold for each one.  

Gold

Gold is probably the most popular (or at least most visible) precious metal investment. It’s an iconic material that people have treasured for years due to its value and versatility.  

Gold holds a distinctive place in commodity markets as a safe haven investment during times of economic uncertainty. Additionally, gold’s low correlation with other asset classes makes it a strategic choice for diversifying portfolios. 

What will gold’s value be in five years? Predicting gold prices over that time might be difficult, but analysts and online forecast tools are bullish on their outlook for gold prices.  

Some experts anticipate prices up to $2,260 or more per ounce, an increase from its spot price of about $2,000 as of early 2024. That number would also top gold’s record highs—the precious metal topped $2,100 for the first time in December 2023. 

Gold Benefits 

Investing in gold offers several compelling benefits that include the following: 

• Hedge against inflation: Gold maintains its value over time, which makes it a good hedge against inflation. As the cost of living goes up, the price of gold often follows suit. 
• Diversification: Gold usually moves inversely to stock and currency values. That can help mitigate your investment risk. 
• High liquidity: It’s generally easy to buy and sell gold. High liquidity means you can quickly convert it to cash when needed. 
• Store of value: Gold stores value very well compared with paper currency, coins, or other assets. Why? Largely because its scarcity and consistent demand keep gold’s value stable. 
• Protection against currency devaluation: Because gold is priced in U.S. dollars, any downfall in the dollar’s value can lead to higher gold prices. Investing in gold can be a tool to stave off currency devaluation. 

Gold Disadvantages 

Like most investments, buying gold comes with its own set of disadvantages, including: 

• Lack of passive income: Gold doesn’t provide dividends or interest like stocks or bonds do. You only profit from gold if you sell it at a higher price than you paid. 
• Storage and insurance costs: Because it’s a physical commodity, gold requires secure storage, which can be costly. Insuring your gold assets adds to the overall cost. 
• Price volatility: While gold is generally a safe haven asset, its price can still be quite volatile. If the price falls significantly, you could incur losses. 
• High transaction costs: Buying and selling gold can involve high transaction costs, reducing your overall return on investment. 
• Opportunity costs: You could use the money you invest in gold for other potentially profitable investments, such as bonds, stocks, or real estate. The potential returns you miss out on from those investments represent the opportunity cost of buying gold. 
• Market speculation: Market speculation can influence the price of gold. If investors favor other investment options, gold’s demand may decrease—leading to lower prices. 

Remember, while gold offers many benefits, you should consider your financial situation and objectives before making any investment decisions. Speak with a trusted financial advisor before you buy. 

Silver 

Some investors consider silver “gold’s little brother,” but it’s another precious metal that can be a viable investment option. Silver’s price tends to be more volatile than gold’s, which could offer the potential for higher returns at a greater risk.  

Investors often seek silver during economic instability. Silver has extensive industrial applications, contributing to its overall demand and market value. 

Silver’s outlook over the next five years differs from gold’s, mainly due to decreased industrial production and lack of investor interest. Rating agencies have a rosier outlook ($70 by 2030), but the World Bank expects silver to trade between $20 and $25 over the next five years, roughly in line with its spot price throughout 2023 and 2024. 

Silver Benefits

Silver offers a range of benefits for investors, some of which it shares with gold. These include: 

• Greater affordability: Silver is cheaper than gold. This makes it more accessible to many people and allows investors to buy more units than they could of gold with the same amount of money. 
• Industrial demand: Silver’s wide range of industrial uses, including electronics, medicine, and renewable energy, gives it steady demand. This can support its price. 
• Portfolio diversification: Much like gold, silver offers a way to diversify your investment portfolio that doesn’t correlate with stocks and bonds. 
• Inflation hedge: Silver, like gold, is a store of value during times of economic uncertainty or inflation. 
• Potential for higher returns: Silver prices can be volatile. While this can lead to price declines, it also allows for significant price increases—and a high return on your investment. 

• Physical ownership: When you buy physical silver, you’re purchasing a tangible asset that you can hold in your hand. That isn’t the case with stocks or bonds. 

Silver Disadvantages

Silver, like gold, has disadvantages, too, like the opportunity cost. Other drawbacks can include: 

• Price volatility: Silver prices can fluctuate wildly in short periods. This could lead to potential losses if you need to liquidate it at the wrong time. 
• No dividends or interest: Because it’s a precious metal, silver doesn’t generate income like dividends or interest. You’ll only realize potential profits if you sell silver for more than you paid. 
• Storage and insurance costs: Investing in physical silver requires safe, secure storage, either in a safety deposit box or a depository. Insuring your silver holdings is another expense to consider.  
• High transaction fees: Like gold, silver investing is susceptible to high transaction fees that can eat into potential profits. 

Before buying silver, do your due diligence. Consider your financial goals and risk tolerance. And always consider speaking to a financial advisor about potential investments. 

Platinum 

Platinum is a rare precious metal renowned for its corrosion resistance and exceptional conductivity. It’s a mainstay of industrial production, especially in the automotive industry. Because of its rarity and utility, platinum can see significant price surges during periods of economic growth. 

The five-year outlook for platinum prices depends mainly on trends in industrial demand. However, the World Platinum Investment Council sees several consecutive years of deficits and price catalysts building that could drive platinum’s price up or down. Platinum has hovered between about $900 and $1,100 per ounce in recent years. 

Platinum Benefits 

In addition to diversification, inflation resistance, and physical ownership, platinum’s benefits include: 

• Industrial demand: Platinum’s industrial demand for automotive uses, electronics, and jewelry makes it popular. That consistent demand can help support its price. 
• Scarcity: Coupled with its industrial use, platinum is significantly rarer than gold or metal. That could drive its value up over time. 
• Growth potential: If industrial demand for platinum increases (such as in green technologies), its price could increase. 

Platinum Disadvantages

Platinum doesn’t generate passive income, which could be a drawback for some investors. It’s also subject to the same storage and insurance costs that impact gold and silver. It has other unique disadvantages, too. These can include: 

• Price volatility: Like other precious metals (including silver), platinum’s price can be pretty volatile. This may lead to significant price swings and can impact your profits, especially if you have to sell when the market is down. 

• High cost: Platinum is far more expensive than some other precious metals. This could make it inaccessible to some investors. 
• Market liquidity: Platinum does not see as much trading as gold. That means its market is smaller. This reduced liquidity could make it harder to sell platinum when you need to. 
• Economic dependency: The demand for platinum heavily depends on the economic conditions of certain industries. Downturns in the jewelry or automotive industries could negatively affect prices. 

Palladium

Palladium might not be as well-known as other precious metals, but investors have recently started to notice. Like platinum, palladium is highly valued for its industrial uses in automobile production.  

Palladium’s rarity and high demand have led to periods of significant price increases. For investors who want exposure to precious metals, it’s an intriguing option, with a spot price hovering near $1,000 an ounce as of early 2024. 

However, palladium’s recent forecasts show a decline primarily due to weak auto production. It’s already slid far after peaking at more than $3,400 an ounce in 2022. 

Palladium Benefits

Palladium’s unique benefits as an investment include the following features: 

• Industrial demand: Palladium’s significant industrial use drives consistent demand. That consistency—if it persists—could bode well for palladium’s price. 
• Scarcity: Palladium is also rare, and that scarcity could work to increase prices over time. 
• Long-term potential: Palladium investing yields better long-term results than instant wins. While prices can fluctuate, the general trend over time is favorable. 
• Increasing prominence: Palladium has gained prominence in the precious metal market, which could lead to increased demand and higher prices in the future. 

Palladium Disadvantages

Palladium has its fair share of disadvantages, too. These can include: 

• Price volatility: Palladium prices are highly volatile. This can lead to significant losses if you sell when the price is low. What drives palladium volatility? Usually, it’s a substantial shift in industrial demand. 
• Limited product selection: The options for palladium investing are more limited than those for other precious metals like gold or silver. This could make it more difficult to diversify your holdings. 
• Risk of lower demand: Palladium’s value heavily depends on its industrial uses. If demand for these uses decreases, it could lead to a drop in the price. 

• Lack of historical data: Compared with gold and silver, palladium lacks long-term historical data. Palladium’s popularity didn’t explode until the late 1980s, and its price charting history began in earnest in the late 1970s. That makes it difficult to predict future price movements. 
• Higher risk: Palladium might be a riskier investment than other precious metals because of its volatility and dependence on industrial demand. 

What Is the Best Precious Metal to Invest in Right Now?

Because precious metals share many advantages and disadvantages, there’s no clear-cut answer for investors. Gold and silver are staple investments that generally have enjoyed historical stability, but palladium and platinum offer the potential for big profits if economic and industrial conditions allow. 

Ultimately, the best option depends on you and your preferences. Before you buy any precious metal, consider your risk tolerance. Speak with a financial advisor who understands the complete picture, including how these investments will fit into your portfolio. 

If you’re ready to invest in precious metals for retirement or diversification, Advantage Gold can help. Contact us today to learn more about opening your precious metals IRA. 

Precious Metal Investment FAQs

What are the pros and cons of investing in gold? 

Pros of investing in gold include its liquidity and status as a safe haven asset, especially in uncertain times. Drawbacks, however, include its tendency to go in the opposite direction of interest rates and that it doesn’t provide passive income. 

Why should I consider silver as an investment? 

Silver is often more affordable than gold, which could make it more accessible for investors with smaller portfolios. It also has industrial uses that can drive demand upward. 

What makes platinum and palladium attractive investment options? 

Platinum and palladium have significant industrial uses and are extremely rare. Like other precious metals, they offer portfolio diversification and potential long-term growth. Just be aware of potential risks like their price volatility and reliance on industrial demand. 

Is a silver IRA a good investment? 

Like all investments, a silver IRA carries risks. However, buying silver can be an excellent idea for individuals who want to buy tangible assets to diversify their investment or retirement portfolio. Silver can also exist as part of a broad precious metals IRA, including other materials like gold, platinum, and palladium.