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How to invest in precious metals

Given the high price, look for denominations of less than 1 ounce, Mladjenovic says. "You can tiptoe into the market by buying ½-ounce American Eagle coins," he says. They're also issued in ¼-ounce and 1/10-ounce denominations. Coin markups average 2 percent to 6 percent, he says.

Avoid buying antique or collectible platinum coins, Mladjenovic says. "There's a higher dealer markup," he says. You'll also be stuck with judging a coin's rarity and authenticity.

Platinum exchange-traded funds, or ETFs, that own the metal, are another good way to invest, Mladjenovic says. For example, ETFS Physical Platinum Shares, or PPLT, tracks the price of physical platinum by holding bullion, which is stashed in European vaults.

Palladium is more obscure

A lesser-known precious metal than platinum, palladium is growing in popularity. The market for it is also highly volatile, partly driven by industrial demand, so investors need cast-iron stomachs. About 50 percent of palladium demand is based on its use in cars for catalytic converters.

Palladium is the poor man's platinum, Mladjenovic says. In late September, it sold for about $651 per ounce compared to about $1,563 per ounce for its sister metal, but it also is hitting all-time highs.

Like platinum, palladium bullion coins are the easiest investment vehicle. But they may be tougher to find since the U.S. Mint currently doesn't issue platinum coins. Still, Palladium Canadian Maple Leaf coins are sold at major dealers. As demand for precious metal coins has grown, the U.S. Mint has begun to consider selling palladium coins, according to the government website.

The ETFS Physical Palladium Shares, or PALL, fund also holds the bullion, which tracks the market.

Ultimately, platinum and palladium have surging demand on their side. Morgan says hard assets held during times of financial uncertainty aren't as risky as you might think.

"These metals are for investors who want something rarer," he says. "They're not for everyone."

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Don Taylorinvesting
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