Gold tends to be all the rage in times of economic uncertainty. Investors flock to the "yellow metal" when things go sour because they see it as a safe haven for their money until they feel better about venturing back into things they view as riskier, like common stocks and real estate. (Check out Real Estate Vs. Stocks: Which One's Right For You?)

IN PICTURES: 5 Simple Ways To Invest In Real Estate

Such a strategy can actually be very dangerous, though. When gold or any other investment becomes too popular, it raises the risk of a "bubble" - unsustainably high prices that could suddenly plummet, losing investors a lot of money very quickly.

That doesn't mean you should avoid gold altogether; just don't put most or all of your money into it. There are lots of other precious metals, and many could be considered better investments than gold because they're more versatile and aren't such strong objects of investor sentiment. Here are five metals that may be an alternative to look at besides gold.

  1. Copper
    This is one of the most versatile metals. It's used to make electrical wiring, car batteries, microchip circuitry, pipes for plumbing in homes and commercial buildings, roof flashing, gutters, musical instruments and solar power cells. Copper can also be mixed with other metals to make valuable alloys such as bronze, pewter and brass. (Foresight and careful observation are the keys to trading this market An Overview Of Commodities Trading.)

  2. Zinc
    Like copper, zinc is present in many alloys (in fact, zinc and copper are both in brass and bronze). Zinc is also important for die-casting, galvanizing and rubber making and can be used as a paint pigment, wood preservative and agricultural fungicide. As a dietary supplement, it is thought to have antioxidant properties that speed healing and slow aging.

  3. Silver
    Besides its well-known uses in making jewelry, silverware and coins, silver is in dental fillings, architectural glass and hearing aids. Some musical instruments are made of silver or silver alloys and silver is used to produce formaldehyde. Because it has antibacterial and antifungal properties, it is included in catheters and other medical devices to reduce the risk of infection. It is even added to socks to help control bacteria-related foot odor. (If you are a hedger or a speculator, this market offers a world of profit-making opportunities, check out Trading Gold And Silver Futures Contracts.)

  4. Platinum
    As a primarily industrial metal, platinum plays the role of catalyst in the processing of petroleum and chemicals such as nitric acid, fertilizers and synthetic fibers. It is also a vital component of high-voltage wires, magnetic coatings for high-density hard disk drives, fiber optics, fiberglass, catalytic converters and spark plugs.

  5. Palladium
    Like platinum and silver, palladium plays key roles in the dental, chemical and auto fields. iPhones and other electronics might not even exist if it weren't for palladium. Also known as "white gold," palladium is used to make jewelry and watches, too.

Why They're Worthy Investments
Precious metals with lots of different uses make attractive long-term investments. These metals are more apt to appreciate and hang on to their value over time because they're vital to industries around the world. However, you can expect their prices to fluctuate greatly from week to week and month to month, just like most other investments.

IN PICTURES: 10 Tips For The Successful Long-Term Investor

Gold really isn't the greatest investment for the long haul because its price often depends mainly on how people feel. It may rise a lot when investors are nervous and want something that seems safe. But it can very quickly lose value when investors start feeling bolder and begin venturing into other areas. Sentiment certainly plays a role in the value of other precious metals, but not to the extent that it does with gold.

How to Invest In Precious Metals
Precious metals are generally available as coins or bullion. However, most people invest in them by purchasing stock in the associated mining companies or buying shares of mutual funds or exchange-traded funds (ETFs) that specialize in one or more metals.

Be careful when investing in precious metals. Because they can be very volatile in the short-term, it's best not to over-represent them in your portfolio. Keep the portion reasonable – 4-10% of your overall portfolio, for example - so you can enjoy the shine without undue risk.

For the latest financial news, see Water Cooler Finance: The Beginning Of A Foreclosure Crisis?

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: ETFS Physical Platinum

    Learn about the physical platinum ETF. Platinum embarked on a bull market from 2001 to 2011, climbing to record prices along with other precious metals.
  2. Markets

    The 4 Biggest Russian Mining Companies

    Discover information about the metals and mining industry in Russia, along with information on some of the largest Russian mining companies.
  3. Technical Indicators

    Key Financial Ratios to Analyze the Mining Industry

    Discover some the most important financial ratios used by investors and analysts to evaluate companies in the metals and mining industry.
  4. Chart Advisor

    Traders Step Back to Assess Commodities Damage

    Traders are turning to these exchange-traded notes and exchange-traded funds to analyze key commodities and determine what could be coming next.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Gold Trust

    Learn about the SPDR Gold Shares ETF, how it tracks the price of gold, and what type of investors may want to hold shares in their portfolios.
  6. Investing News

    Oil or Gold: Which Will Recover First?

    Not sure where oil and gold are headed? The answer is complex.
  7. Investing

    Using Fibonacci to Analyze Gold

    Use Fibonacci studies to analyze gold by picking out hidden harmonic levels that can provide major support or resistance.
  8. Technical Indicators

    Key Financial Ratios to Analyze Oil Companies

    Learn about key financial ratios investors will want to use when analyzing oil companies, and what these ratios say about the future prospects for companies.
  9. Stock Analysis

    The 5 Biggest Canadian Mining Companies

    Learn about the largest Canadian mining companies by market capitalization, including potash production, gold production and other rare minerals.
  10. Mutual Funds & ETFs

    ETF Analysis: United States Natural Gas Fund LP

    Find out more about the United States Natural Gas exchange-traded fund, the characteristics of the ETF and the suitability and recommendations of it.
RELATED TERMS
  1. Benchmark Crude Oil

    Benchmark crude oil is crude oil that serves as a pricing reference, ...
  2. Christmas tree (oil and gas)

    A vertical assembly of mechanical elements used in oil exploration ...
  3. FPSO (Floating Production Storage ...

    Acronym for Floating Production Storage and Offloading. FPSO ...
  4. Day rate (oil drilling)

    In oil production, a day rate is the amount a drilling contractor ...
  5. Houseable

    A piece of art that is able to fit inside a regular-sized living ...
  6. Reverse Gold ETF

    Exchange traded funds that are designed to trade in a direction ...
RELATED FAQS
  1. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  2. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
  3. How can electricity be traded as a commodity by an individual investor?

    Electricity can be traded in the financial marketplace like any other commodity. Electricity futures trading offers an alternative ... Read Full Answer >>
  4. What are some of the major regulatory agencies responsible for overseeing financial ...

    There are a number of agencies assigned to regulate and oversee financial institutions and financial markets, including the ... Read Full Answer >>
  5. What types of corporations would be expected to have higher growth rates than more ...

    Investors looking for corporations with higher-than-average growth rates have several factors to consider. Although younger ... Read Full Answer >>
  6. How are commodity spot prices different than futures prices?

    Commodity spot prices and futures prices are different quotes for different types of contracts. The spot price is the current ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!