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INVESTING IN PRECIOUS METALS

INVESTING IN PRECIOUS METALS: AN ANALYTICAL AND COMPARATIVE ASSESSMENT

Over the past decade, precious metals have taken a back seat to securities as the preferred investment vehicle by the majority of investors. The slippage in preference among investors, however, does not necessarily mean that investing in precious metals is not a good strategy for some investors.

This research provides an analytical and comparative assessment of precious metals as an investment vehicle. This assessment covers four precious metals ù gold, palladium, platinum, and silver. The presentation of the findings of the assessment is in three major sections, as follows: (1) a comparison of the performance of the four precious metals covered in the research; (2) a consideration of factors that argue for or against investment in precious metals as opposed to other investment vehicles; and (3) optional investor strategies for investing in precious metals.

Comparing the Performance of Four Precious Metals as Investment Vehicles: Gold, Palladium, Platinum, and Silver

Gold has an ancient history as a preferred investment vehicle. Gold, however, has lost some of its luster since the mid-1980s. Exhibit 1, which may be found on page 3, provides a graphic illustration of gold prices for the 30-year period 1972-2001. The exhibit presents three price levels for each year ù the high trading price for the year, the average trading price over the entire year, and the low trading price for the year.

As the data presented in Exhibit 1 indicate, gold experienced a strong run-up in price from 1972 through 1981. The price run-up was especially steep from 1977 to 1981, and sharp price drop occurred over the succeeding four years ù 1981 to 1985.

Gold prices rallied from 1985 to 1988. Since 1985, however, the trend in gold prices, in spite of some small rallies, has been slightly downward. As Exhibit 1 also indicates the price volatility (defined for the...

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INVESTING IN PRECIOUS METALS. (1969, December 31). In LotsofEssays.com. Retrieved 05:36, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1687208.html