NPR transcripts are created on an urgent deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. The authorized record of NPR programming is the audio record. Investors in precious metals and many other types of assets are understandably tired of the constant fluctuations of today's economy.
As with any other asset, precious metals rely on certain driving forces that will drive up or down their price. Platinum and palladium, other rare metals that are often invested in as protection against inflation, are equally prone to fluctuation. Platinum and palladium, as rare metals used by automakers to reduce harmful vehicle emissions, are likely to benefit from recovery in automotive demand and tighter emissions regulations, among other factors. Unlike paper money and stocks, physical precious metals, such as gold and silver, are resistant to inflation because they derive their value differently from paper money.
Despite the savings in metal, which has already reduced the silver content in photovoltaic cells by 80% in the last decade, demand will grow in the next five years. Persistent investor interest in gold and precious metals could drive up the price of gold, according to Nicky Shiels. This countercyclical relationship between inflation and gold is precisely why so many investors prefer to diversify their portfolio with precious metals. While the silver price outlook is affected by supply and demand, it is also heavily influenced by investors buying precious metals as safe haven assets in times of economic or political uncertainty.
The dollar and the desire to keep gold as a hedge against inflation and currency devaluation help boost the price of the precious metal. While some ETFs represent ownership of the real metal, others hold shares in mining companies rather than real gold. The value of silver generally fluctuates more than gold due to the numerous industrial applications that link white metal to the fortunes of numerous industries. But, on the other hand, this transition to green energy could benefit precious metals such as silver, which has unique qualities vital to the production of solar cells used in electricity production.
Gold is also intrinsically valuable because metal is highly conductive, making it essential for countless industrial and electronic applications. The prices of base metals such as copper rise and the prices of precious metals such as gold fall when the economy is doing well.