What are precious metals?

Precious metals include gold, silver, platinum, iridium and palladium. These metals are valuable because of their rarity, or because of their use in industrial processes, car manufacturing, technology (such as computers and phones) or as investments.

Where have you heard about precious metals?

Gold, silver and platinum are fairly ubiquitous in our society and the price of gold is often mentioned in market round-ups in the news. But you may have heard about iridium and palladium if you were looking to invest in precious metals futures market, where all these precious metals are often traded.

What you need to know about precious metals.

Precious metals are considered by some experts to be a good way of diversifying an investment portfolio. Precious metals can offer a store of value and are considered by some as a good hedge against inflation. This is why you'll sometimes see gold and silver prices rise when there are times of uncertainty.

There are several ways of investing in precious metals:

• Commodity ETFs: these are convenient means of purchasing and selling precious metals
• Common Stocks and Mutual Funds: this is where you can purchase shares in mining stocks
• Futures and Options: this is where you can place big bets on teh futrue of metals
• Bullion: this is a physical invesment that will real real space for storage of the coins and bars
• Certificates: this is similar to bullion, without having to physically manage the storage of the metals.

In 'Precious Metals for Dummies', author Paul Mladjenovic says that a good rule of thumb is to hold no more than 5% of your portfolio in platinum and palladium and 10% for gold and silver. This is because the markets for platinum and palladium are smaller, and trading is more limited than it is for gold and silver.