5 Alternative Investments That Could Be Very Profitable

With the stock market tanking and real estate in the doldrums, many of us are looking for alternative places to invest money which will allow us to make a buck or two. Unfortunately, in this economy, even the old standbys like bonds and t-bills are considered to be poor investment vehicles since they offer such dismal returns (never mind the fact that the Federal Government could theoretically default on loans if Congress can’t agree on a deal by August 2, 2011).

No Guarantees

However, there are some places to invest that are quite profitable and which can actually be interesting options. It’s important however to keep in mind that all of these investments carry a great deal of risk and should not be treated as “safe” investments. Rather, they are alternative investments which could make money, but they could also lose a great deal of money.

Natural Gas

While natural gas is a fossil fuel, which many might assume is going out of style, the fact is that natural gas has real potential to grow over the next decade or two a significant form of energy production.

Before the earthquake in Japan and the subsequent melt down at the Fukushima reactor, the smart money was saying that nuclear energy would be the energy of the future. Since then however, many countries have been scrambling to find more conventional (and safe alternatives).

In the wake of the Fukushima disaster, natural gas has emerged as a favorite of many energy ministers the world over for a number of reasons. First, it is relatively inexpensive and plentiful, especially since new technology has allowed for shale gas to be extracted, allowing the United States and other nations to find new reserves of the material on their own soil. This has then become a key method for achieving some form of energy independence over the next few years.

Add to that the fact that natural gas is one of the cleanest fossil fuels available and it’s easy to see that demand for the stuff is likely to go up over the next few years. You can invest in natural gas by purchasing stocks in companies that sell the fuel wholesale to energy producers or by purchasing stocks in energy utilities that have invested heavily in the fuel.

Palladium

Palladium is the precious metal you’ve likely never heard of before, but it’s also potentially a great place to invest your money. Palladium, which is a cousin of the better known platinum, is a kind of metal which is commonly used in electronic devices and especially in electric vehicles.

As more Americans begin switching to electric vehicles to escape sky high gasoline prices, the value of palladium keeps going up since it’s such a vital component of these vehicles. In fact, over the past few years, the value of palladium has tripled as demand has regularly outstripped supply for the rare metal.

You can invest in palladium by purchasing stocks in palladium mines or by purchasing palladium futures on commodities exchanges. Keep in mind however that futures are of the riskiest investments available and that you could end up owing money if things don’t go your way.

Silver

One more precious metal which has been gaining in popularity is silver. While gold has skyrocketed in value over the past few years in an overheated investment market for the precious metal, silver has also become a popular investment choice. However, because silver endured a strong pull-back after a parabolic run up, many investment experts believe that silver could become the new gold, soaring in value over the next few years as demand heats up even more.

You can invest in silver by purchasing silver bullion or coins or by purchasing stocks in silver mines.

European Government Bonds

For those with a stomach for risk and an appetite for reward, Greek, Irish, Spanish and Portuguese government debt all have the potential to show some serious returns as investment vehicles. That’s because all of those countries have been experiencing difficulties in borrowing money, pushing up the interest rates that they are forced to pay.

Of course, the reason that these countries are having trouble borrowing money is because they are overextended and some believe that they may default on their loans. Others however believe that because these countries are members of the euro zone that European powers will all band together to try and prevent a euro crisis, even if it means helping to cover the debt that these nations have accumulated over the past few years. Again, a potentially risky investment as these nations could theoretically default on their loans, however it’s also potentially a rewarding investment, assuming they are able to pull out of their deficit spirals.

Foreign Currency

Finally, the Forex market is attracting many investors looking for solid returns on their investments. A number of foreign currencies have appreciated significantly over the past year, including the Australian dollar, which is up 27% for the year and Israeli New Shekel, which is up 20% against the US dollar for the past year.

It’s also possible to invest in some of these currencies by purchasing foreign currency denominated certificates of deposit. These banking instruments guarantee a rate of return and the principle is guaranteed by the FDIC. However, because they are denominated in foreign currencies, the value of the investment could still go down (or up) in US dollar terms depending on the foreign currency exchange markets

George Gallagher is a investing and finance writer. He also works with students and parents to find private student loans for the upcoming college semester.