Investing in gold or silver offers many different avenues. Physical metals may be purchased directly; alternatively, you could invest in mining stocks or ETFs that track these assets.
Physical precious metal investments offer the easiest, and cheapest, path to wealth creation; however, they carry with them an inherent risk that could cause you to lose substantial sums of money.
It’s a tangible asset
Gold and silver are tangible assets with finite monetary value, unlike stocks and bonds which provide dividend payments or generate interest income. Although physical precious metals don’t provide income streams themselves, that should not prevent investment into them.
Owning physical gold and silver provides another advantage: eliminating counterparty risk. Unlike stocks, bonds, or real estate investments that could potentially be confiscated by governments during times of turmoil and uncertainty. As such, owning physical gold and silver provides a safe-haven investment during times of unpredictability and unease.
If you plan to invest in physical gold and silver, it is vitally important that you find a trustworthy dealer. A private online dealer specializing in precious metals could be one option, but make sure they offer secure storage facilities as well as product insurance to safeguard you against scams or theft. Doing this will maximize the return on your investment.
It’s a safe haven
Physical gold and silver investment offers one of the safest ways to diversify your portfolio, but comes with some drawbacks: you must store them safely while paying insurance and storage fees; these expenses can add up quickly over time and are important considerations as gold/silver investments do not produce income like stocks/bonds/real estate do.
Another viable investment choice would be financial derivatives such as futures and options, which allow investors to gain leverage on metal prices traded on centralized exchanges while diversifying positions and protecting themselves against inflationary market conditions like currency devaluation.
At the core of it all lies your individual circumstances; however, as a general guideline 10% of your net worth would make an ideal starting point. Should economic or geopolitical risks increase significantly then increasing this percentage may become necessary.
It’s a hedge against inflation
Gold and other precious metals should be part of any investment portfolio for several key reasons. Precious metals have long been seen as an effective hedge against inflation, unlike stocks or bonds which entail credit risk, are uncorrelated with currencies, and do not display as much volatility than other asset classes.
Physical gold and silver ownership does come with some drawbacks, however. They’re difficult to store and liquidate when purchasing larger sizes (10-ounce bullion bars are much harder to sell than one coin), plus require storage fees which could impact returns negatively.
If you’re considering adding precious metals to your portfolio, it is crucial that you research the market and locate a reputable dealer. Fees and mark-ups vary by dealer so it is wise to compare prices before making a purchase decision. Furthermore, consider keeping coins and bullion secure within either your home safe or an independent vault for storage purposes.
It’s a good investment
Investing in precious metals is an excellent way to diversify your portfolio and protect assets against economic turmoil, inflation and potential devaluation of digital and fiat currencies. Physical bullion investment offers the best returns; however, investors should be wary about fees or markups when purchasing physical metal.
Investors looking to avoid storage costs may opt for exchange-traded funds (ETFs), similar to stocks and bonds, as an efficient means of investing in metals without owning physical coins themselves. ETFs offer indirect exposure but require payment of an expense ratio to gain access.
Gold and silver investments may also be made through mining companies or precious metal streaming/royalty companies, which offer low risk with high upside potential and preferential long-term capital gains rates. Unfortunately, only a handful of publicly-traded gold/silver streaming/royalty companies exist currently.