The world of investments can be fraught with danger if you do not know what you are doing, so if you are looking to invest in gold or silver, the first thing that you should do is research. It is the same with any investment and should not be one that you rush into, but follow the advice below, and you can start investing your savings safely.
Look At The Historical Prices
Before investing in any market, you need to look at the figures and crunch some numbers, and it is the same with gold and silver. Look at the price of the commodities over the last year, and then look for news in the mining industry that stands out and could affect their market prices. Look at the current market price of gold or silver and see how they have been performing over the last 3, 6, 9, and 12 months, and if you are happy that the value will increase over time, you are ready to make your investment.
Buy From Reputable Sources
No matter what precious metal you are looking to invest in, it is vital that you use the services of a trusted and reputable dealer, ensuring that there are no hidden costs. Websites such as Citygoldbullion are transparent with all their fees, including delivery charges, so you know the total value of your investment. It is always worthwhile contacting the best companies and comparing their prices and charges, as some are higher than others, costing you more overall.
Protect Your Investment
Before committing to purchasing your investment, you will need to consider where you are going to store it, which will need to be safe and secure. You will either have to have a safe in your home or office or use the services of a company that can hold your investment safely and securely for a monthly premium. You must take the cost of protecting your investment into account, as this is often a charge that people do not consider before purchasing gold or silver bullion. It is also vital that you protect your investment adequately, as would you want to hide your investment under your bed or in a wardrobe?
Why Invest in Gold and Silver?
Before discussing how to invest in gold and silver, it is necessary to understand why these metals are worth the investment.
The inflation hedge: one of the main reasons most investors buy gold and silver is as an inflation hedge. Increases in the cost of living usually go along with declining purchasing powers in fiat currencies, such as in the case of the US dollar. However, gold and silver retain their value even during economic downturns.
Riches Preservation: The value of gold and silver has stood the test of time. For centuries, there’s been little change in their value, while paper money shoots up and down with questionable predictability.
Types of Gold and Silver Investments
You have several options to invest in gold and silver. The type you will choose will depend on your investment objectives, risk tolerance, and how much you want to keep your assets.
Physical Gold and Silver
Physical gold or silver bullion is the most direct investment into gold. Gold bullion is gold bars or coins made by recognized mints. Some of the most popular types of physical gold bullion are American Gold Eagles, Canadian Gold Maple Leafs, and gold bars from known refineries.
Silver bullion, like gold bullion, can be purchased in bars, coins, or rounds. Coins that are very well recognized include the American Silver Eagle and the Canadian Silver Maple Leaf, both of which have a reputation for their purity and quality.
Physical gold and silver are physical commodities that you can hold in your hand. They also eliminate counterparty risk because they don’t depend on any institution.
Gold and Silver ETFs
Gold ETFs: A gold ETF tracks the gold price and allows you to invest in gold without physically holding it. Some of the most popular ones include SPDR Gold Shares (GLD) and iShares Gold Trust (IAU).
Silver ETFs: iShares Silver Trust is one of the prominent ones. These ETFs offer an easy way to get exposure to silver without having to deal with the logistics of physical metal ownership.
ETFs are highly liquid, and one can buy or sell them on the exchange. There is also no need to store them, thus making them hassle-free for investors who do not need to bother with physical bullion.
Gold and Silver Mining Stocks
Another way to gain exposure to gold and silver is through investments in mining companies. Mining companies extract gold or silver from the earth, and their stocks are often linked to the price of the metals they produce.
Increasing price for gold and silver: At times, mining stocks can act as magnifying glasses for one or both metals. A higher price for the metal means that mining companies are now bound to obtain higher profit gains and, thus, higher stock prices. These stocks can also pay dividends.
Investment Tips in Gold and Silver
Have a Clear Investment Goal: The type of investment you want to make in gold or silver should depend on why you are in the precious metals. Do you expect inflation? Do you want to diversify your portfolio or save wealth? Based on your investment goal, you make the correct type of investment and determine what percentage of your portfolio you will invest in precious metals.
Do Your Homework: Just like with any investment, you have to do your homework before you buy an ounce of gold or silver. First, pay attention to market trends and know what these metals have done historically. Then, keep an eye out for outside influences like inflation, geopolitical events, and what’s going on in the world as a whole.
Dollar-cost averaging: This is one strategy that seems to fit really well with gold and silver investment strategies. In DCA, you invest a fixed amount every so often without regard to the price. In the long run, it tends to average out the costs and reduce fluctuations from short-term market movements, thus ensuring you amass more assets at a lower average cost.
Consider Your Risk Tolerance: Inherently, investing in precious metals can be very volatile, especially if you are trading futures or mining stocks. If you’re less tolerant of risk, you can find investing in precious metals in physical gold and silver or through ETFs. On the other hand, if you’re more aggressive when it comes to risk, then mining stocks or futures would give you higher potential payouts.
Investing in precious metals: Most people classify gold and silver as safe-haven assets. However, it would be wrong not to diversify within precious metals by investing in both gold and silver to reduce risk.
Be wary of scams: Precious metals markets are easy prey to scams. When buying physical gold or silver, ensure that you’re buying from a reliable dealer. Never fall for an offer that sounds too good to be true, and thus, always confirm the authenticity of your purchase.
Conclusion
You should start with a small investment in gold or silver rather than diving in headfirst and using all your available funds to make the purchase. Doing this will allow you to use the services of more than one of the best bullion dealers and storage companies until you find one that you are 100% satisfied with and the costs are affordable.