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The gold price has skyrocketed in 2024, with prices on the rise a new record at the end of May. Although prices have retreated slightly below $2,400 an ounce since then, gold prices are still up year-to-date by around 13.5% through early June, according to data from the World Gold Council.
These recent price increases have been driven by factors such as investor concern inflation and the direction of the economy. However, with the price of gold near all-time highs, some investors may be wondering whether investing in gold still makes sense or whether it is better to turn to other precious metals that might be flying under the radar.
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Gold prices remain high – other precious metals worth investing in
Yes, gold prices are high, but that doesn't necessarily mean investors should run away from gold and instead invest in other precious metals, experts say.
The case for continuing to invest in gold
The price of gold is near an all-time high today, but it may not be as high as you think when account for inflation.
“The price of gold is near its all-time highs in nominal dollar terms. But adjusted for inflation, the current dollar price of gold per ounce is well below its 1980 peak,” says Dr. Roger D. Silk, Founder and CEO of Sterling Foundation Management. .
And, just looking at the price doesn't tell if gold is a good investment right now, adds Silk. Rather, you can consider how gold fits your overall portfolio However.
“Many portfolios that include stocks and bonds will benefit from having an allocation to gold of up to 10%. The reasoning is that gold has provided diversification, allowing a portfolio with gold to have a higher expected return with the same amount of risk, compared to the same portfolio without gold,” says Silk.
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The case for investing in silver
A precious metal that investors can consider in addition gold is silver.
“Looking at history, in many cases where gold had a major rally, silver followed in the months after and often rose by a greater percentage than gold. If history repeats itself, silver can be a good short-term investment,” says Patrick Yip. , APMEX's senior director of business development.
However, speculating based on the price of silver alone can be risky. Instead, you can look at the underlying reasons for investing in silver.
For example, silver tends to have more industrial uses than gold. But investing on this basis may require advanced knowledge, while ordinary investors may focus on the macro picture.
“Gold and silver are monetary precious metals and tend to perform well in times of inflation, geopolitical tensions and economic uncertainty,” says Yip.
The case of other precious metals
While you might think other precious metals might be attractive in this setting, it's important to understand what you're getting yourself into.
“With the price of gold rising rapidly, other precious metals are likely to receive investor attention. But investing in a metal simply because it is grouped with gold or silver is a risky venture,” says Peter C. Earle, senior economist at the American Institute. for economic research.
That's because other precious metals don't necessarily benefit from investors looking for stores of value in times of uncertainty the way that gold and silver do.
For example, “platinum and palladium are also precious metals, but their demand is mainly due to industrial uses,” says Yip.
As such, their pricing can be volatile depending on the underlying use cases.
Palladium rose to about $3,000 an ounce in March 2002, for example, but is now below $1,000 an ounce. Meanwhile, platinum has bounced back and forth between roughly $700 and $1,2000 an ounce since the start of 2015, Earle notes.
“The same is true for ruthenium, iridium, rhodium and osmium: their prices have been volatile, driven almost entirely by esoteric market factors. There is little reason to expect a prolonged relationship between price movements of gold and price action in other precious metals,” says Earle.
Therefore, unless you have experience in these particular metals, you may want to stick to the investments you are most familiar with.
“Gold and silver have a long and well-documented history as hard assets that function as stores of value in periods of economic distress and monetary scarcity. But due to scarcity and industrial use, the factors that influence the prices and liquidity of other precious metals It is unlikely to be understood by anyone who is not intimately involved in the mining or trading of these metals,” says Earle.
Some even argue that silver should be grouped with these other precious metals outside of gold, which might require more expertise.
“Unless you're a professional, our view is that you probably shouldn't invest in silver, platinum or palladium, as these are primarily industrial commodities, although they are also precious metals,” says Silk.
The bottom line
Just because an asset like gold has relatively high prices doesn't mean it is or isn't a good investment, nor does it necessarily say much about the investment case for other precious metals. Instead, investors should consider factors such as how an investment fits into the broader economic picture, where it might fit into their portfolio strategies, and their understanding of different assets before taking any investment decision.
