NEW YORK (TheStreet) -- Gold's laggard performance has been one of the more interesting stories to watch in 2012. After last year's breakout performance, easing macroeconomic concerns and coyness on the part of the Federal Reserve regarding new rounds of quantitative easing have helped to knock the highly sought-after yellow metal from its upward path.For evidence of this disappointing showing, investors need only compare the performance of a bullion-backed gold fund like the iShares Gold Trust ( IAU) to that of a product linked to a fellow member of the precious metals arena, like silver or platinum. Since the start of the year, IAU has risen approximately 5%. The iShares Silver Trust ( SLV) and the ETFS Physical Platinum Shares ( PPLT), meanwhile, have enjoyed gains of more than double this magnitude.
The outlook for palladium is improving and, in the event that the bulls can remain in control, it could very well end up being one of the top precious metals to watch in the months ahead. Nevertheless, investors should avoid becoming overzealous with products like PALL. As I mentioned above, palladium is attractive during improving market conditions, but it tends to be susceptible to more-pronounced fluctuations over time. Those who dive headfirst into a bullion-backed product like PALL may leave themselves vulnerable to unwanted risks. Rather than a core portfolio holding, a fund like PALL is best suited as a small tactical position that allows an investor to bet on short-term bursts of strength. It is crucial to avoid falling in love with palladium; doing so may result in unnecessary headaches.