• Gold
• Silver
• Platinum
• Palladium

Types of Precious Metals

The four most popular investment metals are gold bullion, platinum bullion, palladium bullion, and silver bullion. All of these have experienced price rises over the past several years for two main reasons. First is the increase in demand around the world as large economies such as China and Japan have continued to expand at a fairly rapid pace. Second is the flight to “safe haven” investments resulting from the bursting of the housing bubble in the United States and the financial meltdown that accompanied the onset of a severe recession. As the stock markets took a beating and retreated from all-time highs reached in 2007, many investors reallocated their resources to other venues representing perceived safety.

Actions by the U. S. government to combat the recession have included record low interest rates, record budget deficits, and substantial increases in the money supply. Many economists believe that at some point in the future the Federal Reserve will have to reverse course and start increasing interest rates in order to stave off inflation. For those invested in commodities, inflation is likely to increase the value of their holdings as prices escalate.

The price of gold has increased about 300% in the past five years and has been on a continuous uptrend. While inflation has not been an issue as yet, the recent rise in the gold price appears to be in anticipation of future inflation resulting from the ongoing monetary and fiscal policies. The other metals have experienced similar rises in price.

Why Invest In Precious Metals

Gold has been the symbol of wealth and luxury throughout recorded history. Ancient civilizations prized gold for its beauty, color, and the ability to fashion it into ornaments, jewelry, and other manifestations of status and power. Thousands of years later, nothing has changed. The earliest forms of money often consisted of gold coins, and gold ingots were used as a means of barter.

After World War II, the United States, with its reserves at Fort Knox, adopted the gold standard of $35 per troy ounce. Since the price of gold was fixed, gold was not viewed as a viable investment vehicle. However, in 1971 President Nixon disconnected the dollar from gold and the exchange rate was allowed to float relative to other currencies based on market prices. The gold price exploded, reaching an inflation-adjusted all-time high in 1980. On an adjusted basis, current gold prices are roughly one-half of the 1980 level. This is only one reason why many believe that it’s still a good time to buy gold.

While the other precious metals have not enjoyed the same celebrity status of gold, they are seeing increases in demand and price. Current platinum prices are well below the highs reached in 2008 but have been on a steady uptrend since dropping from those highs. Some believe that this trend will continue and that this is a good time to buy platinum.

Current palladium prices are roughly one-third of the highs reached in 2001. The price has been on a steady uptrend since the beginning of this year. Since the demand for the metal is increasing due to economic growth in China and India, some believe this may be a good time to buy palladium.

After breaking through $20 per ounce in early 2008, silver had lost roughly have its value by the end of the year. Since then the price of silver has consistently trended upward and is now within striking distance of $20 again. Some investors believe that if it exceeds that level, it will have a broken a key resistance level and that now may be a good time to buy silver.

Buying Precious Metals

One of the most popular ways to invest in precious metals is to buy coins and bullion that are produced by government mints. The two types of coins available are antique coins that have collector value and newly minted coins. While all of these coins carry a face value, they are all worth far more in meltdown value.

The United States has a long history of minting gold and silver coins, many of them worth huge sums due to their rarity. Silver was the primary component of most U. S. coins until 1965. At that point, other metals were used because the 90% silver content had become too expensive and exceeded the face value of the coins.

Rare coins are not bought for the value of the metal and research is required to properly establish their fair market value. More recently, government mints have been producing the following coins for possible investment:

Gold coins: American Eagle, British Sovereign, Canadian Maple Leaf, South African Krugerrand, Mexican Gold 50 Pesos, Vienna Philharmonic, and U.S. Mint 24K Gold Buffalo Coins. Gold price per ounce (ask) as of 24 November 2009 - $1170.

Platinum coins: Canadian Maple Leaf, Australian Koala, and American Eagle. Platinum price per ounce (ask) as of 24 November 2009 - $1465.

Palladium coins: Canadian Maple Leaf. Palladium price per ounce (ask) as of 24 November 2009 - $375.

Silver coins: American Eagle, Canadian Maple Leaf, and Austrian Vienna Philharmonic. Silver price per ounce (ask) as of 24 November 2009 - $18.50.

The price you pay per coin will be higher than the daily quoted spot price since a premium is added for each coin you buy. If you are able to buy in larger quantities, you may be able to reduce the overall premium and cost per coin. These precious metals are also available in the form of bars of various sizes and weights. While some government mints produce these bars, they are also available from companies such as Produits Artistiques de Métaux Précieux (PAMP), Wall Street Mint, Engelhard, Johnson Matthey, Sunshine Minting, Credit Suisse, and Pan American Silver. Availability and prices will vary due to the volatility of commodity trading.

Precious Metals And The Future

There is little debate that the demand for precious metals is on the rise. In addition, troubled economic conditions around the world are pushing many investors into investments that don’t necessarily depend on economic growth to thrive. While no one can accurately predict the future, the price of platinum and the price of palladium appear to be gaining momentum. Current silver prices are approaching a key resistance level and gold is still below the inflation-adjusted highs of 1980. Keep in mind that the prices for precious metals are likely to continue to be very volatile, so unless you’re an experienced trader, it’s best to maintain a long-term perspective.