In recent months and weeks, prices of precious metals — gold, silver, platinum, palladium, and rhodium — have been reaching new historical or multi-year record highs.
Still, when investing in precious metals, you should remember that each precious metal is precious in its own unique way.
Investing in gold is actually boring. First, gold prices are much more stable compared to most other assets, particularly during periods of crisis.
Second, during periods of instability and higher price volatility, the price of gold tends to have a negative correlation with the prices of other assets (see Picture 1 below).
Third, the price of gold almost always climbs when the U.S. dollar exchange rate declines and real, or inflation-adjusted, interest rates fall.
Investing in gold will not make you rich. But in the long run gold maintains its purchasing power very well.
A potential breakout of silver prices above $50 per one Troy ounce or even $100 per one Troy ounce spurred by the current rally in…