The combination of an improving global automobile industry and supply shortages is painting an optimistic picture for palladium and platinum as we move ahead, and funds like PALL and PPLT may prove attractive in the coming weeks and months. However, it is important to note that these two components of the precious metals industry tends to behave a volatile manner.

Therefore, while it may be tempting to dive headfirst into either of these funds, both are best approached conservatively. By using PALL or PPLT in combination with a gold-based product like iShares Gold Trust ( IAU), investors can construct a well-diversified precious metal portfolio.

Written by Don Dion in Williamstown, Mass.

RELATED ARTICLES:


At the time of publication, Dion Money Management owned iShares Gold Trust.

If you liked this article you might like

India's Gold Play Driving Silver Prices Higher?

BOE Stimulus Good as Gold for Precious Metals Investors

Forget About Gold -- This Is the Precious Metal to Buy Right Now

4 Investments Traders Say Will Decline: Twitter, Canadian Dollar and More

Don’t Abandon Gold for Miners Too Quickly