In the world of precious metals, the most popular choice for investors over the years has been gold. This is for good reason as the SPDR Gold ETF (NYSE:GLD) is up over 165% in the last five years as the S&P 500 has gained a paltry 5%. Gold has also been a more convenient choice versus its peers due to the introduction of GLD in 2004.
IN PICTURES: 20 Tools For Building Up Your Portfolio

Recently several ETF firms have rolled out a number of commodity-tracking ETFs that have expanded the choices for investors searching out exposure to metals such as platinum, palladium and silver. Before the availability of precious metals ETFs, the only option for individual investors in search of metals exposure was through a futures account, buying and storing the physical metal or metal-related equities. (For more, see A Beginner's Guide To Precious Metals)

Metals ETFs
Over the last few years GLD has grown to become the second most widely held ETF in the world. Naturally, investors who have an interest in gold begin to look for similar opportunities and that is why the secondary precious metals became popular. The three metals that have shot up in popularity are silver, platinum and palladium. There are now ETFs available that track the futures price of all three metals, giving investors easy access to the niche metals.

Silver
The closest relative to gold is silver; the two go hand in hand for many reasons. The one major difference between the two is that silver is more than just a precious metal; it is also used in various industries throughout the world. The largest silver ETF is the iShares Silver ETF (NYSE:SLV), which began trading in 2006. The ETF has gained in popularity as the price of gold has moved higher and silver has moved along for the ride. Since 2009, SLV has outperformed GLD by a margin of 30%, 63% return versus a gain of 33% for GLD. However going back to 2007, GLD doubled the performance of SLV, gaining 82% versus 41%.

Palladium
The first palladium-based ETF was introduced in January 2010, when the ETFS Physical Palladium ETF (NYSE:PALL) began trading near $43/share. The ETF closed out April at $54.80, a gain of 34% in just over three months. During the same time frame both SLV and GLD have struggled to eke out minimal gains.

Platinum
Platinum ETFs have been around longer, going back to early 2008. That is why there are several options for investors looking to own a share of the market. Two Exchange-traded notes (ETNs), very similar to ETFs, hit the market in 2008: E-TRACS Long Platinum ETN (NYSE:PTM) and the iPath Dow Jones Platinum ETF (NYSE:PGM). Please note there are major differences between ETNs and ETFs as far as tracking and tax consequences. (For more, see Exchange Traded Notes - An Alternative to ETFs)

Metal Equities
When it comes to gold equities, there are the big names like Newmont Mining (NYSE:NEM) and Barrick Gold (NYSE:ABX), along with what investors refer to as the junior gold miners that may only have exposure to one small mine. Searching for equities that will offer exposure to silver, platinum, and palladium is more of a daunting task.

According to our TC2000 software there are nine stocks listed in the silver sector with the two largest being Silver Wheaton (NYSE:SLW) and Pan American Silver (Nasdaq:PAAS). Of the two, SLW is my pick in the sector as it has shown great relative strength, closing out the month of April at an all-time high. The palladium sector does not offer as many choices and there are only two pure-play stocks on the major US exchanges, North American Palladium (NYSE:PAL) and Stillwater Mining (NYSE:SWC). Both stocks hit one-year highs in April before pulling back to end the month.

Investors looking for a pure-play in the platinum sector that trades in the US will be out of luck. However, a new ETF launched in March, the First Trust Global Platinum ETF (Nasdaq:PLTM) is composed of a basket of stocks that are active in the platinum group metals sector. The ETF is composed of 25 stocks from around the globe and is a true global platinum investment option.

Which of the Four
Now that there are four choices in the precious metals sector besides gold, how should investors tackle the sector? I suggest determining the percentage of your portfolio that will be dedicated to the sector, then picking two to four of the investments listed in the article as a starting point.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  3. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Europe Financials

    Learn about the iShares MSCI Europe Financials fund, which invests in numerous European financial industries, such as banks, insurance and real estate.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  5. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Small Cap

    Learn about the SPDR S&P Emerging Markets Small Cap exchange-traded fund, which invests in small-cap firms traded at the emerging equity markets.
  6. 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.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Turkey

    Learn about the iShares MSCI Turkey exchange-traded fund, which invests in a wide variety of companies' equities traded on Turkish exchanges.
  8. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  9. Mutual Funds & ETFs

    ETF Analysis: Guggenheim Enhanced Short Dur

    Find out about the Guggenheim Enhanced Short Duration ETF, and learn detailed information about this fund that focuses on fixed-income securities.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares US Oil&Gas Explor&Prodtn

    Learn about the iShares U.S. Oil & Gas Exploration & Production ETF, which provides an efficient way to invest in the exploration and production sector.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  5. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  6. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
RELATED FAQS
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
  6. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
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!