Gold, gold, gold! The precious metal is all over the news these days after a 16% gain since its December low. Gold topped out at a record $1,918 in late 2011 before rolling back, but some are convinced the commodity will continue its recent run and regain the $1,900 mark — and perhaps move even higher.
Gold is indeed attractive for a host of reasons. European debt fears (to say nothing of America’s own financial woes) have made some investors less likely to hide out in government debt and more likely to hold gold amid broader economic uncertainty. Also, hard assets in general have been doing well due to inflationary fears.
But investors shouldn’t think gold is the only way to cash in on some of these broader trends. Indeed, many hard assets have been rallying strongly — and as part of diversifying your portfolio, it may be time to give some of them a look.
Here are three such metals that could glitter more than gold.
Like gold, palladium is also pricey on a per-ounce basis. These days, the metal comes in coins and bars just like gold. The downside is that, obviously, palladium doesn’t have gold’s widespread appeal, so don’t expect the same kind of fervent following by currency nuts who think precious metals will eventually stand in for paper money. However, as a valuable commodity investment, palladium hits all the right notes.
The metal opened 2010 at around $420 per ounce and ended the year at almost $800, nearly doubling. It fell back in late 2011 along with gold, but is once again in above $700 an ounce after a run of more than 20% since November 2011.
But if you think gold is volatile, palladium is even more so. The metal was “discovered” during the dot-com boom, racing up from around $100 per ounce to more than $1,000 in five years. It then flopped to around $200 as the tech bubble burst.
Palladium is used in electronics that go into everything from computers to smartphones to LCD TVs, hence its ties to broader economic and tech trends. With the world getting only more dependent on these technologies, even in cash-strapped times, baseline demand remains strong.
It may be a wild ride, but palladium is an interesting rub on the hard-asset argument. You get the benefits of gold but also a tie to broader economic trends, whereas gold has no real “use.”
How do you play palladium? Well, the ETFS Physical Palladium Shares (NYSE:PALL) is as pure a way as any. The fund is up 10% so far in 2012.
There also are a handful of primarily palladium miners, including North American Palladium (AMEX:PAL), which is up 15% so far in 2012. However, stock investors have a much greater variety of diversified miners. One is Stillwater Mining (NYSE:SWC), which has significant palladium holdings alongside a platinum mining business. SWC is up 40% or so year-to-date, significantly outperforming the market and many other hard-asset investments.