Precious Metals Guide: Types, Examples, & How to Invest

Precious metals are known for having intrinsic value, utility, and commercial application.

While they are an enticing investment opportunity, there are some risks you should know before adding them to your portfolio.

Read this guide to explore the benefits and risks of precious metals, as well as investment strategies.

What are precious metals?

Throughout history, precious metals like gold and silver have been a good store of value and a hedge against inflation.

They have been popular with investors because they are rare, tangible assets you can physically hold. 

Today, a number of precious metals are used in a variety of consumer goods, making them an alternative investment option for someone who wants to add more diversity to their portfolio.

Top 10 Most Valuable Precious Metals

While gold and silver are two of the most well known precious metals, there are others that can provide a high return in your portfolio.

1. Gold

Gold is arguably the most well-known and sought-after precious metal. It is a good store of value, durable, and has practical applications.

Examples: Gold is used as a conductor of heat and electricity and it can be molded into coins and bars to be used as a currency.

Countries Mined: China is the largest producer of gold, followed by Russia, Australia, Canada, and the United States. The United States has the largest gold reserve measuring over 8,000 tons.

Use Cases: Gold is used in jewelry, as currency, and in industrial applications such as electronics. iPhones have as much as 0.034g of gold.

Investors also include gold in their portfolios as a hedge against inflation and as a safe haven during financial downturns. Central banks like the United States also hold gold.

Investment Types: You can invest in physical gold such as coins, bars, or jewelry. These can be held in a safe in your home or at a secure depository if it is held in a gold IRA.

You can also invest in gold-focused ETFs including SPDR Gold Shares (GLD) or iShares Gold Trust (IAU). You can also invest in gold mining companies such as Coeur Mining Inc. (CDE) for additional diversification.

2. Silver

Silver is both a store of value and is highly conductive, making it essential in many technologies and industries.

Examples: Silver has a number of industrial applications due to its conductivity and durability. It can also be molded into coins and bars to be used as currency or for physical investment.

Countries Mined: Mexico is the largest silver-producing country in the world. It is also mined in Russia, Peru, Australia, and the United States. 

Use Cases: Silver is used in batteries, appliances, solar panels, medicine, and electronics. It is also a store of value in the form of jewelry, silverware, and collectible coins.

Investment Types: You can invest in physical silver through coins, bars, or collectibles like silverware. Silver-focused ETFs, such as iShares Silver Trust (SLV) can expose you to silver without owning it.

You can also invest in a company that produces silver like Pan American Silver Corp. (PAAS) for further diversification.

3. Platinum

Platinum is a rare precious metal, prized for its scarcity and applications in advanced industrial technologies.

Examples: Platinum is part of the platinum-group metals family, which also includes palladium and rhodium. It is used in semiconductors and cars.

Countries Mined: South Africa is the largest producer of platinum. Russia and Canada are two other major platinum producers.

Use Cases: Platinum is widely used in catalytic converters for vehicles to help reduce emissions.

It also plays a role in petroleum refining and is used to produce semiconductors. Platinum is also a popular material for high-end jewelry.

Investment Types: You can purchase physical platinum in the form of bars or jewelry.

You can also invest in platinum through mining stocks like Vale S.A. (VALE) or ETFs focused on platinum production like Abrdn Physical Platinum Shares ETF (PPLT).

4. Palladium

Similar to platinum, palladium is a versatile precious metal valued for its industrial applications and investment potential.

Examples: Palladium is a silvery metal known for its role in manufacturing and industrial processes. It is highly valued for its corrosion resistance and catalytic properties.

Countries Mined: The majority of palladium is produced in Russia and South Africa, accounting for 84% of global production.

Use Cases: Palladium is primarily used in the auto industry to produce catalytic converters that help reduce harmful emissions.

It is also used in electronics, jewelry, dental fillings, and fuel cells.

Investment Types: You can invest in palladium through physical bars or coins or ETFs that provide exposure to palladium such as Sprott Physical Platinum & Palladium Trust (SPPP).

5. Rhodium

Rhodium is the most expensive precious metal due to its scarcity and high demand for application in a number of products.

It is 100 times rarer than gold and often mined as a byproduct of platinum and nickel. 

Examples: Rhodium is a rare, silver-white metal known for its corrosion resistance, high reflectivity, and chemical inertness. It is used in the auto industry as well as to produce consumer electronics.

Countries Mined: The majority of rhodium comes from South Africa. Other producers include Russia and Canada.

Use Cases: Rhodium is a critical component in catalytic converters. It’s also an important catalyst for chemical reactions.

Rhodium is used to produce fiberglass, LCD screens, and mirrors. It can also be used in plating to enhance the durability of white gold and silver.

Investment Types: You can invest in rhodium through physical bars, however, not all precious metal dealers offer them.

The most accessible way to invest in rhodium is through a mining company like Sibanye-Stillwater (SBSW) or an ETF with rhodium exposure such as db Physical Rhodium ETC (XRH0.L).

6. Ruthenium

Ruthenium is a transition metal from the platinum group that plays a role in hardening alloys and producing advanced technologies.

Examples: Ruthenium is used to harden platinum and palladium and it is also used in high-temperature superalloys. It’s used in microelectronics, hard disks, and dye-sensitized solar cells.

Countries Mined: Ruthenium can be mined but it is primarily obtained as a byproduct of nickel-processing. It is produced in Canada and South Africa and ruthenium ores exist in the Ural Mountains in Russia.

Use Cases: Ruthenium is an essential component for chemical reactions in green energy production and manufacturing.

It is used for hard disks, electrical contacts, fuel cells, and dye-sensitized solar cells.

Investment Types: You can invest in ruthenium by owning stock in companies that produce ruthenium such as Impala Platinum (IMPUY) or ETFs with ruthenium exposure like iShares MSCI Global Metals & Mining Producers ETF.

You can also indirectly invest in ruthenium by investing in a manufacturer that produces products using ruthenium such as hard disks.

7. Iridium

Iridium is a rare and corrosion-resistant metal. It is 40 times rarer than gold and has a number of industrial applications. 

Examples: Iridium is shiny, corrosion-resistant, metal that is impervious even to aqua regia. It is primarily found in meteorites and as a byproduct of platinum and palladium mining.

It is used in the auto industry and is a component of crystal manufacturing processes.

Countries Mined: South Africa produces more than 80% of the global iridium supply. Russia, Canada, and the United States are also major iridium producers.

Use Cases: Iridium is used in spark plugs and is a catalyst for electrolysis. It’s also used to chlorinate ballast water in shipping and has aerospace applications in high-performance engine parts.

Investment Types: The best way to invest in iridium is through mining stocks or companies that produce iridium through recycling.

This includes Impala Platinum (IMPUY) and Johnson Matthey (JMPLY).

8. Osmium

Osmium is a bluish-gray metal that is part of the platinum group. It is the densest naturally occurring element making it an important metal in the development of new technologies.

Examples: Osmium is known for its density and corrosion resistance. It’s been used in fountain pen tips but is now sought after for its applications in new emerging technologies such as quantum computing.

Countries Mined: Osmium is mined in South Africa, Russia, Canada, Australia, and the United States. It is the byproduct of nickel-processing.

Use Cases: Osmium is used as a catalyst in chemical reactions. It is used in hard disk manufacturing, semiconductors, and biomedical implants.

It’s an important protective material against X-rays. It is also being applied to research for emerging technologies including quantum computing.

Investment Types: The best way to gain exposure to osmium is through companies developing advanced technologies.

That includes companies contracted with NASA such as Boeing (BA) and Northrop Grumman (NOC).

9. Rhenium

Rhenium, a rare and silvery-white transition metal known for its heat resistance and durability. It’s used in high-temperature advanced technology applications like aerospace.

Examples: Rhenium is valuable because of its ability to endure extreme heat and wear. It is widely used in aerospace, electronics, and manufacturing industries.

Countries Mined: Rhenium is the byproduct of copper mining. Top producers of rhenium include Chile, Peru, Poland, Canada, Kazakhstan, and the United States.

Use Cases: Rhenium is used in jet engine and tribune blades due to its high melting point and resistance to corrosion.

It’s also a key part of petroleum production and is used in semiconductors. It is also used in medical equipment such as X-ray tubes and radiation detectors.

Investment Types: Investing in copper mining companies like Freeport-McMoRan (FCX) is one of the best ways to gain exposure to rhenium.

You can also gain indirect exposure through companies manufacturing products that use rhenium.

10. Indium

Indium, a rare post-transition metal that has high thermal conductivity and a low melting point. It is used in a variety of industries ranging from electronics to renewable energy.

Examples: Indium can conduct heat efficiently and create transparent, conductive surfaces. It is used in electronics, solar energy, and thin-film coatings.

Countries Mined: Indium is a byproduct of zinc mining. Major producers include China, South Korea, Canada and Japan.

Use Cases: Indium is used in electronics including touchscreens and LCD panels. It is also a component in semiconductor manufacturing.

It is used in thin-film coatings on solar cells, mirrors, windows, and aircraft windshields. It is also used in the development of self-charging wearable devices.

Investment Types: You can invest in stocks of companies that use indium such as electronics manufacturers.

A precious metals ETF can also provide indirect exposure and diversification.

How to Invest in Precious Metals

Investing in precious metals that supply a number of emerging technologies is a novel way to capitalize on economic growth while diversifying your portfolio.

Here are a few different ways you can invest in precious metals.

• Precious Metals IRA: A precious metals IRA is a self-directed investment account that allows you to include gold, silver, and platinum as part of your retirement savings. To get started read this guide to help you find a custodian and identify eligible precious metals that can be stored in an IRS-approved vault. 
• Physical Bullion: Coins, bars, and jewelry are tangible forms of precious metals that act as a hedge against inflation. You can purchase physical bullion from an approved dealer and store them at home in a safe, in a safe deposit box at a bank, or at a secured vault. 
• Mining Stocks, Mutual Funds, and ETFs: Shares of mining companies, mutual funds, and ETFs can provide direct exposure to companies producing precious metals while also helping you diversify risk in your portfolio. You can purchase shares of stock or ETFs in a brokerage account.
• Futures Contracts: Futures contracts allow you to buy precious metals at a predetermined price on a future date. While highly volatile, this can be an option to cash in on industries that you anticipate rising in value. You can purchase futures contracts in a brokerage account after you receive approval to engage in options trading. 
• Gold Certificates: These are documents that represent gold ownership without having to physically store gold. You can purchase gold certificates on precious metal marketplaces, however, these may not be available to all investors and have largely been replaced by other assets like ETFs.

Are precious metals a good investment?

Precious metals can offer protection against inflation, act as a hedge during economic downturns, and provide diversification in your portfolio.

Their intrinsic value, finite supply, and application in a number of high-demand technologies make them an attractive long-term investment. 

Precious metals aren’t for everyone, especially if you’re looking to generate income from your portfolio.

To determine whether or not to invest in precious metals, research the historic and projected growth of each metal and use cases that will sustain growth.

The type of precious metals you invest in will depend on your personal financial strategy.

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