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21 March 2023 10h15
Source: Banco Carregosa

Precious metals: 6 options to consider

Precious metals: 6 options to consider


Precious metals are a store of value in the portfolios of savvy investors. Here are 6 investment options you can consider. 


Gold and silver are two of the most popular precious metals among investors, with a centuries-old history as safe havens. But there are other options – and upside potential – in this asset class. Explore 6 options below.


1. Gold, the ultimate precious metal


Gold is perhaps the most popular of the precious metals. This is partly due to its long history and the fact that you can get exposure to it in various forms, such as jewellery, coins, bars or even ETFs. Gold is one of the most stable options, with a steady appreciation over the past few decades and uncorrelated to global financial crises. Historically, the value of this precious metal tends to rise at such times. For example gold is trading at almost 20% above its pre-pandemic level – the same level as the S&P 500 index, which tracks the largest US companies, but with far less risk.


However, like any other type of investment, gold also carries risks. Even in times of greater financial euphoria, it can suffer setbacks. It is also not easily convertible into cash, which can be difficult to use in an emergency. This risk is compounded by the challenges of storage and transportation. However, there are ways to gain exposure to gold through financial instruments, such as investment funds or ETFs that can overcome these difficulties.


2. Platinum, the metal with upside potential


Platinum is another precious metal to consider in a diversified investment strategy. With a high base value, an increasing number of practical applications in a wide range of industries and limited annual production, the price of platinum has risen in recent years. Despite its high base value, an increasing number of practical applications in a wide range of industries and limited annual production, the price of platinum has fallen over the past 15 years. In addition to being a precious metal, it is also an industrial metal and the decline in demand in the decade from 2010 to 2020 is the reason or the fall in price of platinum. Over the past 12 months, this metal has depreciated by 15%. A convenient way to invest in platinum is through ETFs, a simple buying and selling process free from logistical challenges. 


However, platinum is an asset with some geopolitical risk. Unlike other precious metals, it is mined in a limited number of countries, notably South Africa, and is controlled by a small number of mining companies. Therefore, any political or economic issues can have a significant impact on the value of platinum.



3. Palladium, another way to invest in precious metals


Palladium is used in the production of many everyday items, from batteries for electric cars to smartphones and medical equipment. It is around 30 times rarer than gold in the earth's crust and showed a markedly positive trend from 2016 to 2021, but the last two years have seen a downward trajectory, evidenced by a 50% drop.


As palladium is gradually replaced by platinum and production of the number of electric cars increases, it is likely that less palladium will be needed to produce catalysts for new conventional fossil fuel cars.In addition to its sensitivity to certain sectors, such as the automotive industry, palladium is also sensitive to Chinese activity, as most of its production is concentrated in that region.


However, palladium can be an opportunity to diversify a portfolio and can be invested in a very simple way through ETFs. 


4. Silver, one of the most widely used precious metals


Silver is a precious metal with a wide range of applications. Once again, it is a metal that appreciated significantly from 2016 to 2021. Like palladium and platinum, silver is also an industrial and precious metal. It can be made into coins, bars and jewellery, but is also used for industrial purposes, such as batteries, photography, photovoltaics and semiconductors. Demand for silver is expected to increase due to its use in 5G technology, making this precious metal attractive to some investors. 


However, lower demand in recent years has undermined the price, which is down almost 30% from its highs in the spring of 2021. The significant rise in interest rates has punished silver as a precious metal over the past year. The significant rise in 2020 has also reduced its appreciation.


Investing in silver is generally done by buying physical silver. However, it is possible to gain exposure to silver through ETFs that track the price of silver, or by investing in mining or silver-related companies. 


5. Copper, the precious metal of green technologies


Copper is one of the most sought-after precious metals for its electrical and thermal conductivity properties. It is widely used in construction and green technologies. In fact, the energy transition will require huge amounts of copper to manufacture electric cars, charging stations, biodegradable batteries and solar panels. The price of copper may therefore rise as demand for environmentally friendly solutions increases. 


However, it should be noted that copper is the most important industrial metal and therefore its price and demand are positively correlated with the economic cycle. 


It is possible to invest in copper through a wide range of vehicles, particularly in mining companies that extract it. You can also invest in ETFs related to this precious metal.


6. Diamonds, the indestructible precious metal


Diamonds are sought after as an alternative safe haven to gold, and it's easy to see why. They are virtually indestructible, easy to transport and have a wide range of practical applications that ensure a steady – and growing – demand. What's more, this precious metal is benefiting from advances in blockchain technology to achieve transparency throughout the supply chain, allowing its origin to be traced with confidence. 


However, the diamond market is not immune to the influence of political landscapes or world events. Investing in this precious metal requires good research into market trends and diamond quality, as well as an effective strategy for achieving a return on investment. 


Banco Carregosa, specialist in precious metal investment

Investing in precious metals allows you to balance an investment portfolio with exposure to assets that are less sensitive to fluctuating financial markets. However, it is important to invest with the help and guidance of experts who have a thorough knowledge of the market and a wealth of experience. In this way, you will have an investment management tailored to your profile and risk level. You can rely on Banco Carregosa’s team of expert advisors to help you make the most of your investment in precious metals.