By Amrith Ramkumar

Updated Sept. 30, 2019 4:21 pm ET

This article is part of the Journal’s quarterly markets review, “Investing in a Low-Yield World.”

Unlike stocks and bonds, precious metals don’t give investors any income simply for holding them. So why were they among the market’s best performers in the third quarter?

The reason: In a world of falling—or outright negative—yields, nervous investors seeking havens are less likely to miss out on returns from bonds if they put money into gold or silver.

That eliminates the major trade-off that typically confronts those interested in owning gold: It offers no yield at all.

That declining opportunity cost is why trillions of dollars of negative-yielding debt around the world and sharp declines in Treasury yields in the U.S. have sparked a rally in precious metals. The price of silver rose 11% in the third quarter, while platinum rallied about 6%. Gold advanced 4% in the quarter and is now up 15% for the year, headed toward its biggest annual gain since 2010.

The sudden allure of precious metals highlights the turbulence of this year’s third quarter, in which stocks, bonds and other assets swung wildly as investors weighed the latest developments in the U.S.-China trade war. Stocks recovered from a turbulent August to creep back toward records in September, while bond yields, which move inversely to prices, stabilized after approaching record lows earlier in the month.

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