Written by Joey Frenette at The Motley Fool Canada

Gold and silver stocks really heated up in the final quarter of last year. Since the start of February, though, the relief rally in precious metals has begun to run out of steam.

Indeed, gold and silver investing isn’t everyone’s cup of tea. Warren Buffett, the man we know as the Oracle of Omaha, was never a fan of investing in the asset class because it’s not a productive one. Oftentimes, Buffett will compare gold to a productive asset like a farm. Farms produce crops over time, while gold doesn’t do much of anything. Further, investors in precious metals need to pay for security. Undoubtedly, it can be costly to store gold and silver bullion. All considered, gold and silver plays can be questionable purchases for any investment portfolio.

And the more volatile gold and silver miners seem more like speculative trades than any sort of sound long-term investment. Indeed, it’s incredibly hard to predict where precious metal prices are headed at any given instance. Many exogenous forces push the price of gold and silver, making the precious metals universe a tough place to make money as a trader or even a long-term investor.

Gold, silver, and precious metal miners tend to be better bets when there’s inflation and economic uncertainty. Still, with the rise of cryptocurrencies as a parking place for excess capital, gold and silver have been an even less appealing place to invest through the eyes of younger generations.

Compared to stocks, gold and silver tend to come up short over extended periods of time. That said, I do think adding a small bit of gold and silver exposure to your portfolio can make sense in certain situations. Such metals won’t make you rich, but they can help further diversify your portfolio.

Gold and silver quietly beat the S&P 500 last year

In 2022, gold and silver prices didn’t do much. However, the two precious metals didn’t fall as fast or as hard as the stock or crypto markets. Gold and silver lost some lustre, but not nearly as much as tech stocks that shined brightest in the back half of 2021!

Looking ahead, I think gold and silver continue to be great hedging options for stock investors seeking to hedge their bets. That said, those seeking to beat the S&P 500 in 2023 may be left disappointed with a sizeable stake in precious metals or their miners.

At the end of the day, I view gold and silver as suitable for some, but in very small doses. Think of such metals as a secure place to store your wealth, not as a place to grow it over time.