NEW YORK (TheStreet) -- Once an investment darling, gold has run into troubling headwinds during the opening quarter of 2012 as improving economic conditions have driven investors out of safe-haven asset classes. The Federal Reserve and its chairman, Ben Bernanke, have done little to instill confidence either; hints have been dropped, but with no solid word on additional rounds of quantitative easing, the yellow metal has struggled to regain any solid footing.

As gold has foundered, other members of the precious metal spectrum have managed to gather steam. Platinum, in particular, has become a high riser. The

ETFS Physical Platinum Shares

(PPLT) - Get Report

has gained nearly 20% since the start of the year. Comparatively, the

iShares Gold Trust

(IAU) - Get Report

has seen only 7.5% returns.

Platinum has a history of being more expensive than gold. However, as investors have poured into funds like IAU and prices have surged to staggering highs in recent years, the gap between the two precious metal players has closed and even reversed. Amid the turmoil that plagued the global marketplace during the final quarter of 2011, the platinum/gold ratio broke below parity. The recent run-up has helped stifle this decline and, since bottoming around 0.87 in January, the ratio has managed to creep back toward 1.

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Platinum's gains have been encouraging, but it still looks inexpensive and this ascension could continue. As Bespoke notes, the ratio's average since the turn of the new millennium stands at over 1.7.

Unlike gold, which is usually turned to as a hedge during periods of global economic turmoil, platinum is a fair-weather precious metal. Like silver and palladium, platinum is used across a variety of sectors like automobile manufacturing. Therefore, when skies clear and markets head higher, platinum tends to follow suit. This quality has become glaringly apparent this year.

Platinum has enjoyed a strong run-up in recent months. However, any chance of heading higher will ultimately depend on whether the U.S. and global marketplace can stay on its path to recovery.

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While economic indicators have pointed to continued improvement here at home, there are still plenty of factors threatening to upend the rally. A harsh, persistent Chinese economic slowdown, for instance, could be enough to knock the industrial metal from its winning path. Europe, meanwhile, remain a contentious region as the sovereign debt crisis lingers. We have seen some solid progress on this front. However, in the event that fears flair up once again, the pain could spread to platinum resulting in gut-wrenching action for those who are all-in with PPLT.

While I remain bullish looking forward, I recognize that the road ahead will likely be marked by potholes. For this reason, I am hesitant toward the idea of diving headfirst into a metal like platinum.

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A better way to play the precious metal spectrum at this time is to spread assets across a mix of bullish and bearish metals. By allowing funds like PPLT and IAU to reside under the same roof, investors can position themselves for continued strength from platinum while maintaining an element of protection for when the road gets rocky.

Written by Don Dion in Williamstown, Mass.


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At the time of publication, Dion Money Management was long IAU, although positions may change at any time.