“Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants—but debt is the money of slaves.” —Ron Paul
Speculation or Responsible Investing?
Responsible investors don’t buy commodities for short-term gains or gamble against professionals on squiggles of price graphs. Yet farmers and oil drillers lower sales price risks seasonally with commodities options and futures sold to speculators.
Oil gains value from increasing scarcity and uranium from a recovering nuclear industry greener than oil for global warming. Oil demand and production tend to adjust slowly, so volatile prices rebalance markets and ETFs dealing in oil options and futures are far more speculative than stock ETFs.
Governments frequently subsidize energy or tax it and oil frequently suffers from warfare (Kuwait) or nationalizations (Venezuela). Gamble on politics by gambling on oil—or invest long run on solid oil and uranium corporate producers.
But long-term commodities investors buy precious metals, rare earth or platinum metals used for specialized electrical tasks, or common, easily oxidized, base metals like copper, lead and aluminum used for large-scale construction. Oil barrels and copper shavings clutter backyards—and Uranium glows—so precious metals are superior as stores of value or means of trade. It feels nice to hold wealth, but, fearing loss or torture, most investors pay insurance and storage costs.
Self-directed IRAs can contain gold, silver, platinum or palladium. But mining stocks pay dividends while commodities ETFs, generating low-taxed capital gains, diversify portfolios.
Precious Metals:
Gold can enhance Indian dowries or bribe border guards. Evading inflationary political demands, gold stabilized pounds and dollars for centuries. Over 40 recent years, gold went up 611% while stocks soared 3,613%. Stocks have done better long term and high interest encourages bondholding, but gold performs very well in monetary crises and warfare. So the dollar dipped 5% following Trump tariffs, while gold rose from $1,977 to $3,328 in just two years (04/22/25).
Silver and the Platinum group are electrically conducive investment sisters for gold that resist rust. Most silver gets mined as a byproduct of copper, lead, zinc or gold mining and Mexico, China and Peru are the largest exporters. Silver is the poor man’s gold, which often follows gold prices. But silver is used in solar panels and electric cars, so its value may rise faster than gold’s, which may depend more upon increasing jewelry demand in Asia.
Platinum is a malleable silvery white metal, scarcely reactive, used in catalytic converters, dental equipment, jewelry and pacemakers. In good times, platinum’s price doubles that of gold, but in bad times, gold does relatively better as jewelry. Another platinum group metal is Iridium, the corrosion-resistant second densest known element, with uses in aircraft. Palladium, a shiny metal thirty times scarcer than gold, can be rolled into thin sheets for solar energy and fuel cells. Palladium’s prices are volatile due to limited supply and high industrial demand.
Trump seeks Ukraine’s rare earth metals as the Chinese dominate 90% of rare earth mining, processing and magnet-making for wind turbines, electric vehicles, military jets. Rare metal luminescence aids computer screens. Western environmental regulations and intense energy needs discourage American production and keep prices high. Americans buy Chinese mining stocks.
Mundane Opportunities:
Practical minded investors buy base metals whose price depends largely on construction, now fastest in China and India. Coins and guns are filled with Chilean copper but also wiring, plumbing and motors. GDP, Payroll and mortgage rates may determine copper demand, but it is often seen as a leading indicator of growth. Nickel goes into stainless steel, but Iron is a more prolific metal used in skyscrapers, bridges, railways, etc. Invest here if you are bullish on the economy. Aluminum smelting takes electricity so aircraft aluminum prices vary with energy prices and flight fancy.
Base metals and other materials are leading economic indicators which also vary with commodity production and costs, taxes and regulations. Precious metals prices depend on an odd combination of jewelry demand and industry, not to mention trust in the dollar. But rare earths, Platinum group metals, oil, uranium and aluminum prices vary differently than stocks in an uncertain world that rewards diversification of opportunity.
Robert Arne, EA, CFP, MS, of Carpe Diem Financial Life Planning, gives holistic financial advice as his client’s fee-only fiduciary. He serves mostly Santa Cruz Mountain dwellers. These articles must not be read as personal financial, mortgage, tax or investment advice; consult appropriate professionals. Learn more at www.carpediem.financial.
