investing

How to invest in precious metals

Platinum and gold bars
Highlights
  • Precious metals increasingly are coveted for their high-tech uses.
  • Markets for these metals are smaller and trading is more limited than for gold.
  • The best way to invest in precious metals is to buy bullion coins.

Looking for havens other than gold and silver?

Lesser-known precious metals, such as palladium and platinum, may be just the ticket. They are rare metals that have soared in value the past few years. They are also the new metals on the block compared to ancient gold and silver. They began being refined in the 1800s.

Platinum and palladium get an extra pop when gold soars, though. All precious metals move together, says David Morgan, founder of Silver-Investor.com. Platinum, which follows the price of gold, can even sell at a premium to its fellow precious metal.

These metals, increasingly coveted for high-tech uses such as catalytic converters in cars, can help diversify your portfolio and hedge against financial uncertainty.

Before investing in platinum or palladium, ground your portfolio by investing in gold and silver first, Morgan says. "Everyone needs gold and silver," he says."Platinum and palladium aren't for everyone because markets are smaller. They're nicer to have rather than need."

Why? Both metals' prices can be highly volatile. They're bought and sold via precious metals brokers.

Hold them for at least three years, says Paul Mladjenovic, author of "Precious Metals Investing for Dummies." Platinum and palladium should represent no more than 5 percent of your investment portfolio compared to 10 percent for gold and silver. That's because markets for these metals are smaller, and trading is more limited than for gold and silver.

Don't let swan-diving metal prices drive your investment strategy. "Speak to a financial adviser about setting a target price when selling," he says.

Platinum regains its luster

Platinum is 10 times rarer than gold, and the tight supply can mean wildly fluctuating prices. For example, platinum hit a high of $2,252 per ounce in March 2008 only to plummet to $794 in October that year. Supply issues in South Africa, where most of the metal is mined, were to blame, Mladjenovic says. "As soon as the problem was fixed, the metal's price dropped," he says.

The metal hasn't again reached that all-time high.

The best way to invest is to buy bullion coins, or coins minted but not used in day-to-day transactions. "You're less likely to worry about the ups and downs in the market," Morgan says. "So you'll hold onto the coins."

U.S. Mint-issued American Eagle platinum coins are one possibility. They're easily bought at banks, brokerage firms or directly from the U.S. Mint. They also can be purchased at major coin dealers such as Monex Precious Metals in Newport Beach, Calif. Go to the U.S. Mint website, USmint.gov, for a list of authorized dealers.

But a less liquid market than gold can mean they're harder to cash in. "Before you buy bullion coins, ask about the dealer's buyback policy," Mladjenovic says.

This shiny metal, which mimics silver, sold for almost the same price as gold in late September -- about $1,571 per ounce for platinum and about $1,649 per ounce for gold.

advertisement

          Connect with us
Product Rate Change Last week
1 Year CD 0.90%  0.01 0.89%
2 Year CD 1.03%  0.02 1.01%
5 Year CD 1.59% --0.00 1.59%
 
View Rates in your area Search
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

CDs and Investment

How can I pay myself first?

Dear Dr. Don, You often advise readers to "pay yourself first." It sounds like a fine idea. But I'm wondering how that actually should work. I'd like to know how much or what percentage of my income should be set aside... Read more

advertisement

Blog

Dr Don Taylor

ETFs in 401(k)s worth fighting for?

Should your employer's 401(k) plan let you invest in exchange-traded funds, or ETFs?  ... Read more

Partner Center
advertisement

Connect with us