The gold market, though, may remain relatively stable as heavy central bank demand helps prop up prices. According to the World Gold Council, China has historically been a key buyer, but has ceased buying since October 2016. Russia, along with Turkey and Kazakhstan, have supported purchases in the mean time, driving demand up 25% year-over-year as of Q3 2017.
Silver is another precious metal that has exhibited strengthening fundamentals, including rising global manufacturing and industrial production, rising producer inflation and elevated consumer inflation, and strong investor sentiment. Furthermore, production is constricted by lower capital expenditure by miners while demand for industrial applications including solar panels grows. Meanwhile, silver remains historically cheap relative to gold and it may catch up in elevated trading conditions or increased volatility.
Investors who want to use precious metals as a hedge and even a long-term play may consider a number of physically backed metals-related ETFs as a way to diversify a traditional stock and portfolio, including ETFS Physical Swiss Gold Shares (NYSEArca: SGOL), ETFS Physical Silver Shares (NYSEArca: SIVR), ETFS Physical Platinum Shares (NYSEArca: PPLT) and ETFS Physical Palladium Shares (NYSEArca: PALL). ETF investors can also use the ETFS Physical Precious Metals Basket Shares (NYSEArca: GLTR) as a catch-all of all four precious metals.
For more information on the metals space, visit our precious metals category.