More and more, investors are trying to protect themselves from market volatility. With the Fed’s recent commitment to buy $600 billion in Treasury bonds, inflationary expectations are rising along with commodity prices. The biggest gains right now seem to be taking place among precious metals.

The chart below shows that the price of gold has been soaring. The price of gold has risen 26.71% so far in 2010 and it keeps climbing. Another precious metal, platinum, is up 19.07%, while silver and palladium are up 66.28% and 73.40%, respectively, so far this year.

With all of the precious metals on the rise, you may be wondering which one offers the best investment going forward. Since gold, silver, platinum and palladium all are gaining in value, it certainly can be difficult to decide where to invest. However, a new way to bet on all four of the precious metals at once was launched on Oct. 20 through the introduction of ETFS Physical Precious Metals Basket Shares (GLTR).

The shares, issued by ETFS Precious Metals Basket Trust, are intended to reflect the performance of the prices of gold, silver, platinum and palladium bullion, less fees and expenses. GLTR eliminates the need for investors to choose between these four very attractive precious metals. Each share is backed by 0.03 troy ounce of gold, 1.1 ounces of silver, 0.004 ounce of platinum and 0.006 ounce of palladium. The shares represent beneficial interest in the trust.

In turn, the trust holds physical gold, silver, platinum and palladium bullion in the vaults of its custodian, JP Morgan Chase Bank. All physical bullion held with JP Morgan Chase conforms to the London Bullion Market Association’s and the London Platinum and Palladium Market Association’s rules for good delivery. Gold and silver will be held in London, while platinum and palladium will be held in either London or Zurich.

Keep in mind, however, that when you’re talking about precious metals, you are talking about taking on risk. With the market’s recent rise, the prospect for future gains in precious metals could be muted. Most analysts, including me, feel that precious metals are vulnerable to short-term corrections. That means they might be subject to some profit taking.

As you may know, I am hesitant to recommended brand-new funds like GLTR because I like to see a consistent 100,000 average daily trading volume to ensure sufficient liquidity. However, if you are looking to diversify your portfolio by gaining exposure to precious metals as a safe haven against market volatility, a weakening dollar and the threat of inflation, GLTR may be worth considering.

For advice about which ETFs to buy and to sell, I urge you to sign up for my ETF Trader service by clicking here. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to contact me if you have one. To send your question to me, simply click here. You may just see your question answered in a future ETF Talk.