Precious metals offer diversification—and gains

Article Excerpt

Physical gold and silver have been strong performers over the past two decades even beating the S&P 500. Gold has also been much less volatile than the equity markets. Investors shouldn’t overindulge in any one investment, and that includes gold, silver, platinum or any other precious metals. But precious metals—with their steady long-term performance, low level of volatility, defensive characteristics when markets fall—can add to portfolio diversification Notably, gold producers and miners have underperformed physical gold over the past two decades, but this may change as producers’ cost pressures ease, and they start to reward investors with better dividends and share buybacks. Industrial demand drives some prices Precious metals are rare and have a high value-to-weight ratio. The most well-known are gold, silver, and platinum but the group also includes metals such as ruthenium, rhodium, palladium, osmium, and iridium. Apart from investor demand for gold, the metal is also used in the manufacture of jewelry, artifacts, electronics, and medicine. Only 10% to 15% of gold…