Gold prices hit nominal record highs again Monday, settling at $1,612 an ounce in New York trading. The usual culprits were to blame: gridlock in Washington had yet to produce a deal on raising the debt ceiling, while another downgrade of Greece?s credit rating rattled the euro zone.
Part of gold?s allure is that it?s supposed to offer protection against both inflation and financial instability. But there are other investments that provide insurance against instability (the Swiss franc, for example). And when it comes to inflation, well, pretty much all commodities get a lift. (Stocks also benefit from inflation, as we wrote a while back.)
As for investing in metals, all that glitters has not been gold recently. Indeed, gold futures haven?t been nearly as good a bet as some other shiny metals, especially silver. Meanwhile, prosaic old copper, a key indicator of global economic health, has been just as good as gold.
Have a look at this chart of the relative performance of five major metals over the past month, using data courtesy of Finviz.com:
Silver (an inflation hedge with lots of industrial uses, too) has been the biggest beneficiary of any flight to metals, jumping 16.8 percent over the last month. Palladium, used in the auto industry, among others, has also bested gold by a wide margin, gaining 10.2 percent.
Copper (used in, well, everything) has essentially matched gold?s performance with a 7.6 percent gain. Platinum (another biggie for the car industry) has underperformed gold but still put up a nice return of nearly 7 percent.
An advantage of copper, platinum, palladium and silver is that they trade on industrial demand more than gold does. (Gold has industrial uses, too, including jewelry and electronics, but recent price action has been driven by investors and central banks.)
As we?ve said before, a properly balanced portfolio may or may not include commodities such as gold. Besides, if you have been inclined to speculate in precious metals, the real luster?s been found in silver. Gold?s up about 35 percent over the last year. Silver has more than doubled, jumping 120 percent.
Image courtesy of Wikimedia Commons.
More on MoneyWatch
Gold Tops $1,600 for First Time on Debt Debate, Euro Woes
Beyond Gold: Inflation Protection for Your Portfolio
The Best Way to Buy Gold
Source: http://moneywatch.bnet.com/investing/blog/investment-insights/gold-silver-prices/1903/
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