Gold not the only inflation hedge

gold inflation

Investors have been encouraged to consider holding more precious metals in their portfolios than just gold when looking to combat rising inflation.

A specialist fund manager has suggested investors should look to include allocations to a range of precious metals and not just gold in their portfolios as a protective measure against rising inflation.

ETF Securities head of distribution Kanish Chugh noted individuals should consider investing in silver, platinum and palladium, as well as gold, given the economic and geopolitical factors currently affecting markets.

To this end, Chugh pointed out the four precious metals have traded at high levels in the past few years.

He said the current gold price is around US$1840 an ounce after hitting a peak of US$2043 an ounce in March. But despite this development, he noted the precious metal is still trading well above the level of previous years and in a range akin to that established in 2020.

Similarly, platinum and palladium hit peak values in March, whereas sliver hit a valuation high in mid-April, he said.

“The prices of all four metals are driven by their appeal as stores of value and also their roles as industrial metals. The industrial supply and demand dynamics vary for each metal, giving them different trading patterns and giving investors diversification,” he said.

Specifically, he recognised silver is used in batteries and solar panels, platinum is used in products such as glass moulds, hydrogen electrolysers and fuel cells, and palladium is used in car catalysts, chemical applications, dentistry and other medical applications.

The ETF Securities Physical Precious Metals Basket ETF, trading under the Australian Securities Exchange code ETPMPM, holds all four of the aforementioned precious metals in a single portfolio.

The fund’s current holdings include allocations of 50.5 per cent to gold, 25.4 per cent to palladium, 17.7 per cent to silver and 6.4 per cent to platinum.

With regard to performance, the offering has generated an average annual return of 8.5 per cent over the past three years and was up 4.3 per cent over the six months to the end of April.


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