9 Tips for Investing in Gold and Silver
Gold has long been seen as an attractive investment option, especially as inflation accelerates and economic and currency uncertainties arise. Gold offers investors protection against such turmoil while offering solid returns.
Although precious metals have their place in your portfolio, they do not provide regular cash flow and incur high storage costs. Here are 10 tips to get your gold and silver investing underway.
1. Invest in Physical Bullion
Financially-savvy investors recognize that diversifying their investment portfolio is vital for long-term financial success. Precious metals such as gold and silver make an ideal addition to any portfolio as their low correlation with other investments makes them a powerful diversifier.
Physical precious metals – whether purchased as bars or coins–don’t present counterparty risk, unlike stocks and mutual funds which could become subject to bankruptcy or default.
However, investing in physical precious metals entails several costs, such as storage charges and using investor loans (known as margin) to purchase gold or silver (known as margin). Also, physical investment assets cannot be quickly sold due to having to first be converted to cash before selling – making this more of a long-term investment strategy than expected; yet experienced investors recognize its protection and profit potential during times of economic, monetary or geopolitical turmoil.
2. Invest in ETFs
Physical bullion investing is one of the oldest and easiest ways to diversify your portfolio with gold or silver investments, but there are other strategies as well.
ETFs have become an increasingly popular method for investing in precious metals. ETFs provide investors with exposure to the metal without needing to store and insure physical assets themselves, with lower transaction costs and tax advantages as an added bonus.
Many experts, including hedge fund billionaire Ray Dalio, advise investing in precious metals as part of an overall portfolio. How much an individual invests will depend on his/her goals and circumstances. In order to make wise investments decisions with precious metals investments it is vitally important that one understands both their risks and opportunities – this includes finding undervalued or reasonably priced precious metal assets.
3. Invest in Stocks
Diversifying your portfolio with gold and silver investments is often recommended, yet precious metals don’t provide the cash flow of a profitable business or interest-paying bond; most don’t even produce inflation-adjusted returns! In addition, physical metal requires safe storage as well as high transaction costs (insurance and shipping).
Physical precious metal investments are not covered by SIPC or IRA accounts, making investors vulnerable to high-pressure sales tactics or fraudsters using phrases like “limited supply” or “rare opportunity.” Be wary of companies using such terms. An exchange-traded fund or mutual fund may offer more security; their managers store and manage metals safely while charging an expense ratio fee that covers security, administration costs and taxes associated with investing rather than collecting.
4. Invest in Mining Companies
Gold and silver investments may seem alluring to investors due to their historical track record of yielding high returns, yet it’s crucial that investors understand all costs involved with investing this way – storage fees, management charges and leveraged margin interest can quickly eat away at gains made.
Be wary of high-pressure sales tactics when getting a gold investment. Always research a seller thoroughly using FINRA BrokerCheck or performing an internet search before making an investment decision.
Many investors invest in mining company stocks as a way of accessing the precious metals market without physically owning or storing any physical gold or silver. You can also consider investing in ETFs or mutual funds that specifically focus on gold miners; just keep in mind that such investments may be quite volatile. When selecting mining companies to invest in, focus on reputable producers that have full accounting of fees charged against their accounts.
5. Invest in Royalty/Streaming Companies
Gold and silver have long been used as safe, liquid stores of value – providing an insurance against market volatility, political unrest, currency weakness and economic collapse.
Royalty/streaming companies provide an ideal method of investing in precious metals, with lower risks than mining companies yet still providing potential returns from resource expansion and commodity price movements.
Royalty/streaming companies can diversify their portfolios and be selective with their agreements to lessen their sensitivity to gold price declines, with lower selling, general and administrative costs than mining companies as well as lower debt levels than some of the biggest gold miners. I believe these companies will perform well even during difficult markets – Wheaton, Franco-Nevada and Osisko are three renowned royalty/streaming companies with large portfolios of existing royalties and streams.
6. Invest in Coins
Coins offer an ideal means of investing in physical gold and silver, often at lower costs than bullion bars, while still providing anonymity for high-net-worth investors.
When purchasing rare coins, it is essential to keep in mind both their numismatic value and bullion content. Furthermore, working with dealers that provide certificates of authenticity is also recommended as this allows you to monitor your investment over time. Finally, keeping track of purchases and receipts helps track investments over time.
Precious metals offer a great way to diversify a portfolio and can act as an insurance policy against inflation. But remember: precious metals shouldn’t replace stocks and bonds; we recommend including precious metals as one element among many in an overall diversified portfolio.
7. Invest in Bullion Bars
Precious metals provide unique inflationary protection and genuine insurance against financial or political/military upheaval; however, they don’t produce consistent cash flow like profitable businesses or interest-paying bonds do.
Many investors rely on physical precious metals as a safe store of value, storing coins and bars in a safety deposit box or at home. Unfortunately, this method can be both expensive and complex: in addition to paying the cost of metals themselves, additional charges may include shipping and storage fees, markup by dealers and any additional costs or charges which might accrue.
People taking the physical route should be wary of high-pressure sales tactics and fraud risks. Prior to opening an investment account with any gold dealer, always compare costs and capabilities between dealers before opening one up – also be sure to receive a comprehensive accounting of all fees upfront in order to avoid unexpected expenses.
8. Invest in Bullion Coins
Silver coins offer more than inflation protection; they also diversify your portfolio by being profitable investments even during times of economic stress.
One major advantage of investing in bullion is that it does not carry counterparty risk. When investing in stocks or bonds, your reliance is solely on their issuer to fulfill their obligations; while with bullion you own tangible assets that cannot go bankrupt.
How you invest in gold and silver depends on your goals, risk tolerance, and portfolio composition. Some investors choose physical bullion while others favor exchange-traded funds that track precious metals or mining companies. Still others may choose a self-directed precious metals IRA which offers numerous advantages – including lower long-term capital gains rates.
9. Invest in Silver Coins
Silver is an attractive investment option due to its relative affordability and historical reliability in times of inflation or currency devaluation. Unlike gold, however, which has never defaulted, preserving purchasing power over the long-term in times of devaluation or inflation.
Silver coins or bullion provide a psychologically and emotionally fulfilling experience, and it is far easier than other hard assets like stocks or physical property to store safely – such as those which require safety deposit boxes, home safes or precious metals IRAs which charge annual storage fees.
Precious metals provide a useful hedge against market volatility, political instability and global economic uncertainty. By adding precious metals like silver to your portfolio you can diversify investments and lower risk. Many expert investors advise including commodities in an investment plan for maximum return; Omaha even criticised commodity investing!