How to Buy Gold and Silver as an Investment

Investing in gold and silver can be a smart move, especially during times of economic uncertainty.

Gold is a tangible asset that historically holds its value, even when other investments decline.

You can buy gold in various forms, including coins, bars, and jewelry.

Some popular gold coins to consider are the American Gold Eagle and the Canadian Gold Maple Leaf.

Silver, on the other hand, is often more affordable than gold and can be just as valuable.

You can buy silver in forms like coins, rounds, and bars.

The American Silver Eagle is a well-known and trusted silver coin.

Investing in gold and silver requires some research and planning.

Consider your financial goals, risk tolerance, and time horizon before making a decision.

Gold and silver have a proven track record for returns, liquidity, and low correlations, making them highly effective diversifiers. This is especially important for investors, as it can help reduce overall portfolio volatility.

Gold has outperformed stocks and bonds over certain stretches, though it doesn't always beat them, and its track record shows much lower returns over time. However, its low correlations with other assets make it a valuable hedge against economic downturns.

Here are the key benefits of investing in gold:

Silver is more sensitive to economic changes than gold, making it a great investment option. This is because half of all silver is used in heavy industry and high technology, including smartphones, tablets, automobile electrical systems, solar-panel cells and many other products and applications.

As a result, silver demand tends to grow when economies take off, making it a solid choice for investors.

Investors like gold for its proven track record of returns, liquidity, and low correlations, making it a highly effective diversifier. Gold has outperformed stocks and bonds over certain stretches, although its track record shows much lower returns over time.

One of the key benefits of gold is its liquidity. If you're buying certain kinds of gold-based assets, such as ETFs, you can readily convert them to cash. This makes it easy to get in and out of the market.

Gold's low correlations with other assets make it a great hedge. When stocks and bonds go up, gold may go down or vice versa, which can help reduce overall portfolio volatility.

Here are some of the major benefits of gold:

You can gain exposure to precious metals through various investment options, and I'll walk you through some of the most popular ones.

One way to invest in precious metals is by purchasing mutual funds and exchange-traded funds (ETFs) that invest in companies involved in the production of gold and/or other precious metals. These funds often provide indirect exposure to precious metals and can offer greater diversity than direct investment in a single commodity.

If you're not interested in investing directly in physical precious metals, you can consider buying an ETF that tracks the commodity. Three of the largest ETFs include SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and abrdn Physical Gold Shares ETF (SGOL), which have expense ratios ranging from 0.17% to 0.4% as of September 2024.

Alternatively, you can invest in gold and silver mining stocks, which can offer a mix of dividend yield and appreciation. However, junior mining stocks tend to be more volatile than those of major mining companies, which tend to track more closely to metals prices based on their proven deposits.

Here are some popular ETFs that own gold and silver mining stocks: VanEck Gold Miners ETF (GDX), iShares MSCI Global Gold Miners ETF (RING), and iShares MSCI Global Silver Miners ETF (SLVP). Their expense ratios are 0.51%, 0.39%, and 0.39%, respectively, as of September 2024.

Silver is currently cheaper than gold, making it a more accessible option for small retail investors who want to own precious metals as physical assets.

Per ounce, silver tends to be cheaper than gold, which is one of the reasons it's a popular choice for investors on a budget.

This difference in price can make a big impact on your investment portfolio, especially if you're just starting out.

For example, if you invest $100 in silver, you might get a few more ounces than you would if you invested the same amount in gold.

Silver's lower price point also makes it a great option for investors who want to diversify their portfolio without breaking the bank.

So, if you're looking for a more affordable way to invest in precious metals, silver might be worth considering.

If you're looking for alternative investment options, consider buying precious metals from Fidelity, which requires a minimum initial investment of $2,500 and can be purchased in whole ounces or whole numbers of coins.

You can also invest in exchange-traded funds (ETFs) that track the commodity, such as the SPDR Gold Shares (GLD), iShares Gold Trust (IAU), or abrdn Physical Gold Shares ETF (SGOL), which have expense ratios of 0.4 percent, 0.25 percent, and 0.17 percent, respectively.

Owning physical gold, such as in bars or coins, can be emotionally satisfying, but it requires safeguarding and insuring the metal, and the price is solely dependent on the commodity's price rising.

If you're interested in investing in gold bullion, you can purchase it through online dealers like APMEX or JM Bullion, local dealers or collectors, or even a pawn shop.

Physical gold can be difficult to sell for its full market value, especially if you need the money quickly, so it's essential to note the spot price of gold when buying to make a fair deal.

You can also consider investing in mutual funds or ETFs that invest in the securities of companies involved in the production of gold and/or other precious metals, which can provide greater diversity than direct investment in a single commodity.

Some popular options include Silver American Eagle (1 oz), Platinum American Eagle (1 oz), and Bullion Quality Bars.

Here are some popular precious metal investment options:

These options can provide a hedge against inflation and market volatility, but it's essential to remember that the precious metals market is extremely volatile, and investing directly in physical precious metals may not be suitable for most investors.

Mining stocks are another way to take advantage of rising gold prices. By owning the mining businesses that produce gold, you can profit in two ways: if the price of gold rises, the miner's profits rise too, and the miner can also raise production over time.

Investing in individual mining stocks can be a good alternative for investors who want to profit from gold prices. However, it's essential to understand the business and select a proven player in the industry. Be careful about selecting small miners or those that don't yet have a producing mine.

Risks are involved with investing in individual stocks, and mining stocks can be volatile. The expense ratio for VanEck Gold Miners ETF (GDX) is 0.51 percent, and for iShares MSCI Global Gold Miners ETF (RING), it's 0.39 percent, as of September 2024.

To minimize risks, it's best to avoid small miners and those that don't yet have a producing mine. Junior mining stocks tend to be more volatile than major mining companies, which tend to track more closely to metals prices based on their proven deposits.

If you're set on investing directly in particular stocks, it's essential to understand the industry and get familiar with the preliminary feasibility studies, reserve estimates, and valuation methods.

Investing in a retirement account can be a great way to secure your financial future, and one popular option is a Gold IRA. These types of IRAs allow you to invest in precious metals like gold and silver, which can provide a hedge against inflation and market volatility.

If you're looking to invest in a Gold IRA, there are several reputable companies to consider. Augusta Precious Metals, for example, has a minimum investment requirement of $50,000 and offers gold and silver investments.

Goldco, on the other hand, has a lower minimum investment requirement of $25,000 and also offers gold and silver investments. Their BCA rating is AAA, which is a great indicator of their trustworthiness.

Here's a quick comparison of some of the top Gold IRA companies:

Patriot Gold Group also offers a range of precious metals, including palladium and platinum, with a minimum investment requirement of $25,000. Their BCA rating is AA, which is still a great indicator of their trustworthiness.

Platinum is a popular choice for investors due to its rarity and durability. Platinum American Eagle coins are available in four denominations, with a face value of $100, $50, $25, and $10 USD, each containing 1 oz, 0.5 oz, 0.25 oz, and 0.10 oz of platinum respectively.

The Platinum American Eagle coins are 99.95% pure, making them a highly sought-after investment option. Fine content is measured in Troy ounces, giving investors a clear understanding of the metal's value.

Investors can also consider Platinum Canadian Maple Leaf coins, which have a face value of $50 CAD and contain 1 oz of platinum. The Platinum Canadian Maple Leaf coins are also 99.95% pure, providing investors with a reliable and high-quality investment option.

For those looking to invest in larger quantities, platinum bullion bars are available in 1 oz, 10 oz, and 50 oz sizes, with no face value. This makes them an attractive option for investors looking to diversify their portfolio.

Here's a summary of the available platinum coins and bars:

Buying gold and silver can be a wise investment decision.

Gold and silver have historically appreciated in value over time, making them a great hedge against inflation and market volatility.

The precious metals market is relatively liquid, allowing investors to easily buy and sell their assets.

Investors can use gold and silver to diversify their portfolios and reduce risk.

Gold can be used to make jewelry, coins, and bars, while silver is often used in electronics and solar panels.

The spot price of gold is typically around $1,000 per ounce, while the spot price of silver is around $15 per ounce.

Buying gold and silver in physical forms is a great way to start investing.

The oldest method for gold and silver investing is to buy physical coins or bars.

You can buy physical gold and silver from a reputable vendor, and hold it in a safe place.

However, storing physical gold and silver at home can get complex and requires careful consideration.

In 2015, during Greece's economic crisis, a run on banks resulted in withdrawals being limited to 60 euros per day, making it essential to have some physical cash and gold/silver coins on hand.

Having some physical cash and gold/silver coins stashed around for times of emergency is not a bad idea, but storing large amounts at home is unsafe.

If you want to hold more physical gold and silver, it's essential to store it offsite professionally with security, which comes with regular fees that eat away at your investment.

Historically, gold and silver rise much faster in price than storage fees, but it can be volatile along the way.

To buy gold and silver, you'll need to decide on a type of account, such as a self-directed IRA or a brokerage account.

You can buy gold and silver in various forms, including coins, bars, and ETFs.

Consider investing a small amount of money to start, like $100 or $1,000, to get a feel for the market.

For example, the American Gold Eagle coin is a popular choice among investors, and its price is around $1,500 per coin.

Opening a brokerage account is a straightforward process, but it does require some basic information.

You'll need to decide what type of brokerage account to open, which depends on the type of precious metals investment you're interested in. For investments in silver and gold funds and mining stocks, a simple brokerage account will do.

To open a brokerage account, you'll need to provide some personal information, including your name, address, and telephone number.

You'll also need to provide your tax identification number, which is usually your Social Security number.

Additionally, you'll need to provide your date of birth and government ID.

Most brokerages require an email address to create an account, and you'll likely need to answer some questions about your income level, investment experience, and net worth prior to investing.

To open a gold IRA, you'll need to establish a self-directed IRA first. This is a bit more complex than a regular IRA, as a custodian must hold the physical assets. You can't store your IRA bullion at home, for example.

To set up a gold IRA, you'll need to select a custodian to administer the account and an approved depository to hold the assets. Custodians specializing in gold IRAs will help refer you to an approved depository as well as gold dealers.

The minimum deposits in a gold IRA can be quite high, with some starting at $10,000, $25,000, and even $60,000. The price of a one-ounce bar of gold is over $2,700, as of September 2024.

It's also worth noting that precious metals dealers often times are not licensed or registered to provide investment or trading advice to retail customers. They are typically salespeople who are paid commissions based on the products they sell.

If you're considering investing in precious metals, there are some things to keep in mind. IRAs are subject to federal laws and restrictions governing their investments in precious metals.

To be eligible for a Fidelity IRA, you can only purchase specific types of gold coins, such as the Gold American Eagle (1 oz, 1/2 oz, 1/4 oz, and 1/10 oz) and the Gold American Buffalo (1 oz).

When buying gold, supply and demand play a key role in the precious metals market. Some factors that may influence demand are anticipated or actual inflation, economic or political uncertainty, and demand in industrial uses.

Here are some specific gold coins that are eligible for a Fidelity IRA:

Gold can be a powerful diversifier in a portfolio, especially when compared to silver. Gold has been consistently uncorrelated to stocks and has had very low correlations with other major asset classes.

Silver can be considered a good portfolio diversifier, but its industrial uses are more significant than gold's, making it more susceptible to economic declines. Its moderately weak positive correlation to stocks, bonds, and commodities is a notable characteristic.

Gold's limited industrial uses are a key reason for its ability to remain unscathed during economic downturns. This makes it an attractive addition to a portfolio for those seeking to reduce risk and increase returns.

Investors like gold for its ability to act as a store of value, even though it doesn't produce cash flow.

Gold is perceived as a hedge against inflation, making it a popular choice for those looking to diversify their portfolios.

There are five different ways to own gold, each with its own set of risks and considerations.

Investors can buy and sell gold through various means, including physical possession, exchange-traded funds, and futures contracts.

Gold's lack of cash flow means it doesn't generate income, making it less attractive to some investors.

Others consider gold a hedge against inflation, which can erode the purchasing power of traditional investments.

Investors should carefully weigh the risks and potential rewards of each approach before making a decision.

When investing in precious metals through an IRA, it's essential to consider the types of metals allowed. Only gold American Eagle coins (1 oz, 1/2 oz, 1/4 oz, and 1/10 oz) and gold American Buffalo coins (1 oz) are permitted in a Fidelity IRA.

Supply and demand play a significant role in the precious metals market. Anticipated or actual inflation can drive up demand for precious metals.

Economic or political uncertainty can also increase demand for precious metals as investors seek safe-haven assets.

If you're not satisfied with your investment, you can return your gold or silver coins or bars to the dealer. The return policy varies by dealer, but some may offer a full refund or exchange for a different product.

Some gold coins have a face value that's lower than their fine content value. For example, the Gold American Buffalo has a face value of $50 USD, but its fine content value is 1 oz of 99.99% pure gold. This can make it easier to sell or return your investment if needed.

The Gold South African Krugerrand is another example of a coin with a face value that's lower than its fine content value. Its face value is 1 oz, but its fine content value is also 1 oz of 91.6% pure gold.

If you're returning a gold bullion bar, you can expect to receive a refund based on its fine content value, not its face value. The fine content value of gold bullion bars can range from 99.5% to 99.99% pure.

Here's a comparison of the return policies for some popular gold coins:

Keep in mind that the return policy for silver coins and bars is similar to that of gold coins and bars. If you're returning a silver bullion bar, you can expect to receive a refund based on its fine content value, not its face value.

You can gain exposure to precious metals through various investment vehicles. Fidelity offers additional ways to invest in precious metals beyond buying physical gold and silver.

You can purchase mutual funds and exchange-traded funds (ETFs) that invest in the securities of companies involved in the production of gold and/or other precious metals. These funds often provide greater diversity than direct investment in a single commodity.

Three of the largest gold ETFs include SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and abrdn Physical Gold Shares ETF (SGOL), with expense ratios ranging from 0.17 to 0.4 percent.

These ETFs allow you to trade them on any day the market is open for the prevailing price, just like selling a stock, and avoid the huge transaction costs of selling physical gold.

Futures are a great way to speculate on the price of gold rising or falling, and you can even take physical delivery of gold if you want.

The biggest advantage of using futures to invest is the immense amount of leverage you can use, allowing you to own a lot of gold futures for a relatively small sum of money.

If gold moves in the direction you think, you can make a lot of money very quickly, but the leverage can also cut both ways, forcing you to put up substantial sums of money to maintain the contract.

The futures market is generally for sophisticated investors, and you'll need a broker that allows futures trading, which not all major brokers provide.

You can lose a lot of money just as quickly as you can make it if gold moves against you, so be cautious and do your research before diving into the futures market.

ETFs can be a great way to invest in precious metals, especially gold.

If you don't want to deal with the hassle of owning physical gold or the fast pace of the futures market, consider buying an exchange-traded fund (ETF) that tracks the commodity.

Three of the largest ETFs that own gold include the SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and abrdn Physical Gold Shares ETF (SGOL).

These ETFs aim to match the price performance of gold minus their annual expense ratio, which ranges from 0.4% to 0.17% as of September 2024.

ETFs like these are more liquid than physical gold, allowing you to trade them on any day the market is open for the prevailing price.

You can trade these ETFs from the comfort of your own home, avoiding the huge transaction costs of selling physical gold.

Here are the expense ratios for the three ETFs mentioned:

Like stocks, gold can be volatile, but ETFs allow you to avoid the biggest risks of owning the physical commodity.