Chances are that you have heard something or other about investing in gold, but there are other precious metals investments like platinum and palladium exchange traded funds (ETFs) that may prove to be just as worth while.

ETF Securities recently launched the first physically backed platinum and palladium ETFs, reports Rob Silverblatt for U.S. News. Both metals are rare precious metals and are used in jewelry and catalytic converters for cars. [Arrival of physically-backed platinum and palladium ETF.]

  • ETFS Physical Platinum (NYSEArca: PPLT)
  • ETFS Physical Palladium (NYSEArca: PALL)

Before the two precious metal ETFs came onto the scene, investors had to use roundabout methods to invest in the metals, which left room for high tracking errors. The two new funds are physically backed and that means the investments will move in step with changes in the spot prices. Another benefit of the two funds is that investors will own physical, tangible platinum or palladium – each share equals one tenth of an ounce of the metal – but retail investors can’t trade in the shares for the physical metal.

Platinum and palladium can also be used as hedges against inflation. Furthermore, the two metals have the added benefit of being used in industrial applications, which makes it much more correlated with a recovering economy.

The introduction of the two ETFs has created concerns that the new funds could create a gap between supply and demand of the precious metals, which would drive up prices for the underlying metal. Platinum and palladium are much rarer than gold.

Platinum has shot up to around $1,570 an ounce from its low of $919 an ounce and palladium has also shown impressive gains to its current price of around $422 per ounce. ETF Securities is confident the two metals will still do well since the auto industry is only just beginning to recover. [Why metals are on a joyride.]

For more information on precious metals, visit our precious metals category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.