Precious Metals are rare and naturally-occurring metallic elements that have high economic value due to their scarcity, beauty, and various industrial applications. Traders and investors can buy these rare commodities through several mechanisms, including owning physical bullion or coin, derivatives markets, or Precious Metals ETFs. While gold is perhaps the most well-known precious metal investment, silver, platinum and palladium are other options investors should know. As an investment, Precious Metals are often sought after to diversify portfolios and as a store of value, particularly as a hedge against inflation and during times of financial uncertainty.
Safe-Haven Asset. Precious metals, especially gold, are often considered safe-haven assets. Investors may turn to them during times of economic uncertainty, geopolitical tensions, or market volatility.
Diversification. They can serve as a diversification tool in an investment portfolio. Their returns may not always move in sync with other asset classes like stocks and bonds, providing a potential hedge against market downturns.
Lack of Yield. They do not pay interest or dividends. In a low-interest-rate environment, the opportunity cost of holding non-yielding assets may be higher.
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