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The precious metal industry is massive, and all signs point to further growth in 2018. Precious metals such as gold and silver currently enjoy high demand and market value, and bullion are being traded in record volumes on commodity markets.
The big players among the precious metals are gold, silver, platinum, and palladium. Together, their materials are used to forge coinage, jewelry, watches, and ingots. Given how rare they are, they have a very high economic value by weight.
But today’s commodity markets change fast. Now more than ever, trader and collector anxiety is skyrocketing. Given the volatility in traditional stock markets, many believe that the commodity markets will suffer the same fate in 2018. Luckily for you, we’re here to ease some of those concerns.
While it is true that commodities can act erratically on the markets from day-to-day, commodity markets are some of the most stable exchanges in the world. Prices change, but trends often don’t. So read on if you want the insider scoop on precious metal markets, prices, and trends in 2018.
The Basics on Precious Metals
Historically, precious metals were used in the minting of currency. Today, metals such as gold and silver are hardly ever used for this purpose. Instead, they have a high market value due to their status as an investment vehicle and its value to industry.
This makes precious metals a store of value, which is why many enthusiasts use them as a method of storing or protecting their wealth. Their status as a store of wealth is what gives metals like gold and silver their fundamental economic value.
From jewelry and luxury watches to artworks and engravings, shiny rare metals are used for a variety of purposes. No matter, their use as a store of value itself is the key driver behind the expansion of the precious metals economy. Like a house, car, or a wad of cash, precious metals are a financial asset like any other.
Metals as an Asset
Nothing beats holding a solid gold or silver nugget in your hand. The feeling of ownership that comes with having the cold, hard metal right there in front of you simply cannot be matched. However, there’s no need to invest in precious metals in their physical asset form.
Rather, it is becoming increasingly popular to invest in precious metals in other ways. First, in the form of futures contracts. Second, through the buying of stock in publicly traded companies that are involved in the production or exploration of precious metals. Third, through investment funds such as mutual funds or exchange-traded funds (ETFs) which combine all three strategies.
Publicly Traded Companies for Precious Metals in 2018
There are many publicly companies vying for a larger share in the precious metals market. With many to choose from, it can be hard to decide which company to invest in and which exchange to leverage. To make it easy for you, we’ve broken down the top publicly traded companies according to market capitalization and potential for long-term growth.
Beside each listing we’ve included, in bold, the current price of one share in US dollars. You should note, however, that before making any major investment decisions it is always a smart idea to consult with your financial advisor first.
Toronto Stock Exchange (TSX)
- Sabina Gold & Silver (TSX:SBB): $2.10
- Sierra Metals (TSX:SMT): $2.93
- Americas Silver (TSX:USA): $4.58
- Levon Resources (TSX:LVN): $0.30
- Wheaton Precious Metals (TSX:WPM): $26.63
New York Stock Exchange (NYSE)
- Agnico Eagle Mines Limited (NYSE:AEM): $56.45
- Endeavor Silver Corporation (NYSE:EXK): $2.97
- Franco-Nevada Corporation (NYSE:FNV): $93.96
- Gold Fields Limited (NYSE:GFI): $4.12
- VALE S.A. (NYSE:VALE): $14.05
American Stock Exchange (AMEX)
- Barrick Gold Corporation (AMEX:ABX): $16.62
- Hecla Mining Company (AMEX: HL): $3.88
- Coeur Mining Inc. (AMEX:CDE): $8.51
- Sibanye Gold Limited (AMEX:SBGL): $4.66
- Santa Fe Gold (AMEX:SFEG): $0.14
Investment Funds for Precious Metals in 2018
There are a few noteworthy funds for precious metals to pay attention to this year.
Exchange-Traded Funds (ETFs)
Since commodity markets are known for their volatility, ETFs are a safe way to hedge your investment. ETFs are a collection of stocks that are diversified across the industry, which means that they carry far lower risk than buying stocks piecemeal.
Below are some of the top ETFs for maximum, secure exposure in the precious metals market. Beside each is the current net asset value in USD.
- VanEck Vectors Rare Earth/Strategic Metals ETF (REMX): $28.96
- ETFS Physical Palladium Shares (PALL): $99.23
- iShares MSCI Global Select Metals & Mining Producers ETF (PICK): $33.84
- SPDR S&P Metals & Mining ETF (XME): $35.55
- SPDR Gold Trust (GLD): $120.94
Like ETFs, mutual funds are a basket of investments backed by stocks, futures contracts, and bullion. However, unlike ETFs, mutual funds cannot be used by day-traders or speculators due to their restricted liquidity. This adds an additional layer of security, which lowers volatility. The downside is that they usually require slightly higher fees as a result.
We’ve compiled a list of the hottest mutual funds on the market for those looking to make an entry in the precious metals industry. Beside each is the current net asset value in USD.
- Vanguard Precious Metals and Mining Fund (GVPMX): $10.32
- Wells Fargo Advantage Precious Metals Fund (EKWAX): $34.91
- Fidelity Select Gold Portfolio (FSAGX): $20.40
- USAA Precious Metals and Minerals Funds (USAGX): $13.04
- Gabelli Gold Fund AAA (GOLDX): $13.27
Buying Bullion in 2018
When precious metals are forged into bars or coins, they are referred to as “bullion”. Bullion’s main advantage is that its physicality makes it secure. However, its secondary advantage is in the fact that metal bars usually carry lower margins over spot price.
The downside? Well, you have to look after a hunking, heavy piece of metal that can be susceptible to theft and degradation. This is why gold or silver coins make for an easy middle-ground solution, combining the convenience of physicality without the cumbersome quality of bars.
Dating back to the Middle Ages, bullion have been weighed in “troy ounces”. One troy ounce is the equivalent of 31.2 grams. For reference, a standard precious metal bullion bar is traded in increments of 400 troy ounces. This equals 12.44 kilograms—that’s a lot of metal.
Current Metal Prices
Anxiety and uncertainty among traditional stock investors in volatile markets have caused recent interest in commodities. Unlike other assets, commodities like gold and silver are known for their stable prices and linear growth.
Since equities and securities got off to a rocky start in 2018, many retail investors have looked at gold, silver, and platinum as safe exit strategies. A recent forecast by Investopedia found that precious metals are likely to continue rising in price for an extended period of time.
This makes precious metal assets a smart decision. To keep you in the know, we’ve listed the most recent market prices for each metal type below.
At time of writing, the live price of one (1) ounce of gold is $1,351.93 USD. This figure is up approximately 1.26% since the start of 2018.
At time of writing, the live price of one (1) ounce of silver is $16.72 USD. This figure is down approximately -1.77% since the start of 2018.
At time of writing, the live price of one (1) ounce of platinum is $1,002.05 USD. This figure is up approximately 0.98% since the start of 2018.
What’s Driving Growth?
A technical analysis of the precious metals economy can help us understand the changes in asset prices. It can also help us forecast future trends for the remainder of the year. Technical analysis is a financial tool that uses graphs and patterns to analyze market data. In doing this, trends can be found and predictions can be made.
Since equity prices have been falling as of late, the price of gold and silver can be expected to rise. The most recent analyses of the SPDR Gold Shares ETF charts indicate an “ascending triangle” price pattern, which is a good sign of long-term growth in gold. Ultimately, this means that more investors are turning toward precious metals as an alternative to riskier stocks.
The prices of silver and platinum are likely to face a similar fate. Recent market data from iShares Silver Trust indicates a “symmetrical triangle pattern”. This signifies that the price of silver is currently facing resistance, which typically ends in either a major spike in prices above the trendline, or a slight downward push-back. As such, silver is currently more volatile than gold.
To hedge one’s bet against the risk of silver, platinum in a safer alternative. Platinum markets are currently experiencing a “crossover effect” which indicates bullish growth in the short-term, and a general upward trend in the longer term. Therefore, platinum appears to be a safer hold in 2018.
It’s important to remember, however, that consulting a financial advisor is always a smart idea before making investment decisions.