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Gold prices off their highs. Time to jump in?

Gold prices tumbled 6 percent after hitting a new record in late April. Investors who sense trouble ahead expect gold prices to surge higher. But other precious metals are poised to rise if the recovery strengthens.

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Mr. Brusca is also optimistic that Congress will act to start to reduce the deficits in the future. "The odds are they will get something done," he says. "The purchase of gold is in some sense a play against the financial probity of the United States."

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If you share that more hopeful outlook but still want to invest in precious metals, consider platinum or palladium, which are poised to take off if the world economy strengthens. Both metals have various industrial uses, roughly half the world's supply is used by the auto industry. So if consumers buy more cars, prices are likely to go up.

"Palladium [and] platinum are for optimists," says Erica Rannestad, commodity analyst for CPM Group, an independent commodities research, consulting firm, and investment banking company based in New York. The metals took a bit of a beating recently because of the aftermath of Japan's earthquake and tsunami, which is disrupting global supply chains and causing automakers to slow production. Unlike gold investors, palladium and platinum "investors are buying more for [the metals'] supply-demand fundamentals."

ETFs that specialize in these traditionally small markets have also helped investors to pour money into these metals.

For fence-sitters, unsure which way the global economy is headed, silver plays a hybrid role: part industrial metal, part inflation hedge. So far, it has performed even better than gold. Trading at less than $10 an ounce as late as 2008, it nearly touched $50 in intraday trading in April. But it's also more volatile than gold, says Mr. Jheon. Last week, it lost a quarter of its value, before stabilizing around $37 an ounce.

When adjusted for inflation, gold is still not at its record high value, which would be $1,945 per ounce in today's dollars, a level set in January 1980. After that it fell to as low as $437 an ounce by 2005, also in today's dollars.

Investors need to be aware gold can be volatile also, Merk warns. "The correction in gold can be rather severe."

– Monitor intern Geoff Johnson contributed to this report.

IN PICTURES: Gold's journey


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