For example, the platinum-group metals, which include white metals platinum and palladium, are in a supply deficit for the fourth consecutive year.
The Federal Reserve interest rate hikes have also been a focal point for commodity observers. However, while the U.S. dollar index has typically remained flat or rallied pre-rate hikes, the USD has often sold off afterwards, which helped support USD-denominated precious metals.
Furthermore, Butterfill pointed out that precious metals have also strengthened during a Fed rate hike cycle.
“Gold is suprpsing however, typically rising 14%, going against conventional thinking,” Butterfill said. “Real interest rates over these periods remain flat or negative maybe one reason for gold’s performance.”
Investors interested in accessing the various precious metals have many ETF options available. For instance, ETF traders can gain targeted exposure through the ETFS Physical Silver Shares (NYSEArca: SIVR),the ETFS Physical Swiss Gold Shares (NYSEArca: SGOL), ETFS Physical Palladium Shares (NYSEArca: PALL) and ETFS Physical Platinum Shares (NYSEArca: PPLT).
Mike Cameron, Head of Institutional Sales at ETF Securities, explains that the key difference for commodity ETFs lie in the vaulting. For example, the physically backed gold ETF SGOL is backed by bullion bars stored in Swiss vaults. ETF investors are also provided with full transparency into up-to-date bar lists, and vaults are randomly inspected.
Potential investors, though, should be aware that physically backed metals ETFs are treated as collectible investments, so they are taxed at a 28% long-term rate or a 35% short-term rate.
Financial advisors who are interested in hearing more about investment ideas for 2016 can listen to the webcast here on demand.