Investing in silver and gold for beginners
Kevin Mercadante. Each comes with its own set of benefits and costs. Why Invest in Gold and Silver? There are several answers to this question. Nations, kingdoms, and empires have come and gone over the past 5, years, and their currencies have disappeared with them. But gold has continued to function as a medium of exchange and a store of wealth through it all.
How to Invest in Gold
Kevin Mercadante. Each comes with its own set of benefits and costs. Why Invest in Gold and Silver? There are several answers to this question. Nations, kingdoms, and empires have come and gone over the past 5, years, and their currencies have disappeared with them. But gold has continued to function as a medium of exchange and a store of wealth through it all. Modern paper and electronic currencies are conventions. But in and of themselves, they have no intrinsic value. Gold and silver, on the other hand, represent physical commodities.
Not only are they valued for their rarity, but they also have practical applications. For example, both are used in jewelry fabrication and for certain industrial uses. The screenshot below shows the distribution of gold use in the United States. Those are legitimate concerns, but they miss what might be the bigger point.
Gold is, for the most part, an asset that performs best when the economy and the financial markets are at their worst. The U. During the decade, the U. The story with gold was dramatically different. Stocks, on the other hand, went decidedly negative for the entire decade.
The financial markets experienced a sudden and dramatic crash in a space of less than three years. Gold went in the opposite direction. Much is made of how stocks have heavily outperformed gold in recent decades. Not only does that substantiate its reputation as a long-term store of value, but it also shows its importance as one of the very few true counter-cyclical assets available to investors. That makes a strong case for maintaining at least a small allocation in gold and silver in your portfolio, despite the chorus of naysayers.
The case for silver is somewhat weaker than it is for gold. Though it has performed well during certain periods of crisis, the longer-term performance has been well below either gold or stocks. The main advantage of investing in silver may be bullion coins.
With the price of gold being as high as it is, buying a single one-ounce gold bullion coin can be out of reach for small investors. Through the centuries, this has been the preferred way to own gold and silver. Even today, some investors favor bullion as a way to hold an asset that will retain or expand its value in the face of a potential collapse of the financial system.
You can buy bullion in either coin or bar form. Silver bullion coins are typically pre U. However, availability has become increasingly difficult as many have been melted down. You can purchase commemorative silver bullion coins, but they have a significant markup above the metal price. Silver coins are more typically available in numismatic varieties. These are largely coins minted in previous centuries, that carry prices well above the bullion value. This is due to the fact that the coins are popular with collectors and increasingly rare.
Numismatic coins can sell for several times more than the metal value of the coin, which means the primary value is numismatic, rather than based on the price of silver itself. You can also purchase gold or silver bars. Amounts range from one- to ounces.
You can buy gold and silver coins at local coin dealers. But they may have limited availability, and charge higher than normal markups. Local shops are also often more oriented toward numismatic coins than bullion. You also need to be concerned with the reputation of a local coin dealer.
Check references with the Better Business Bureau, your local or state department of consumer affairs, or various online sources to determine if there have been any complaints. You can also purchase gold and silver coins and bars from various large online sources. These are companies that have physical facilities, but market bullion worldwide. They act as bullion exchanges, that both buy and sell the metals. But you may also be able to sell your bullion online, using platforms such as eBay and Craigslist.
Just make sure you receive payment before shipping the metals. Not only will that avoid the need to buy, store, and ultimately sell your bullion, but you can also purchase shares just as you would any other financial assets. Since they are ETFs, they can be bought and sold through popular investment brokers. Some gold investors prefer investing through gold mining stocks.
But there are a few problems with gold mining stocks. That is, investing in gold mining stocks is not the same thing as investing in the metal itself. That includes government regulation, credit liquidity, interest rates, availability of labor, and even trade issues. Second, the mining industry, in general, is highly speculative.
Capital costs are high, and it can take years to convert proven deposits into productive mines. In the meantime, bullion prices could fall, leaving mining companies in an impaired situation. Third, much of the gold mining activity in the world takes place in unstable regions. A gold mining company can see its mines shut down or nationalized by the local government.
Or there may be invasions or civil wars. Gold stocks are extremely speculative, not recommended for the average investor, and not a suitable replacement for bullion in your portfolio. A fund will allow you to invest in the shares of many different gold mining companies, which will reduce the risk of holding just one or two companies, or the cost of holding many.
Just like gold ETFs, gold funds can be purchased, held, and sold through major investment brokers. Now that you understand the benefits of investing in gold and silver, as well as how to buy it, give serious thought to adding a small position in these metals to your portfolio. Your Name. Your Email. We may receive compensation when you click on links to those products or services. Editor's note - You can trust the integrity of our balanced, independent financial advice.
We may, however, receive compensation from the issuers of some products mentioned in this article. Opinions are the author's alone, and this content has not been provided by, reviewed, approved or endorsed by any advertiser.
Investing in gold and silver can be an excellent alternative investment, especially when the economy goes through a downturn. Our guide will help get you started.
If you are really eager to start investing, one of our recommended choices is Wealthfront. They have an easily attainable minimum balance, low fees, and a simple, convenient interface. They're a great choice to start investing easily and quickly. Author Bio Total Articles: Kevin Mercadante Total Articles: He lives in New Hampshire and has backgrounds in both accounting and the mortgage industry.
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The Beginner's Guide to Investing in Gold. Here's everything you need to know about how to invest in this precious metal. Reuben Gregg. Investing in silver and gold isn't for everybody, but precious metals can be a great option. A Beginner's Guide to Gold and Silver Investing.
Imagine yourself sitting in a stream swirling water in a pan, desperately hoping to see a small yellow glint of gold and dreaming of striking it rich. America has come a long way since the early s, but gold still holds a prominent place in our global economy today. Here's a comprehensive introduction to gold, from why it's valuable and how we obtain it to how to invest in it, the risks and benefits of each approach, and advice on where beginners should start. It was also hard to dig gold out of the ground -- and the more difficult something is to obtain, the higher it is valued. Over time, humans began using the precious metal as a way to facilitate trade and accumulate and store wealth.
Why Zacks?
Gold can be a very useful way to diversify your portfolio. It's relatively rare, and its value often doesn't move in line with other assets such as equities or property.
How to Invest in Gold and Silver: A Beginner's Guide
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Learn Investing in Gold and Silver for Dummies (2020 Edition)
Are you considering silver investing? With tensions high worldwide, now may be the time for investors to enter the market. With silver prices on the rise, how does one invest in the white metal? The articles listed below provide an overview of investing in silver from Silver Investing News. Like with most investments, there are both pros and cons to silver investing. Below is a list of factors you may want to consider before adding the white metal to your portfolio. Silver can offer protection — Investors often turn to precious metals during times of turmoil. When political and economic uncertainty are rife, legal tender generally takes a backseat to assets like gold and silver. Silver bullion is tangible money — Silver bullion is a tangible asset that is finite.
For example, ten-year U.
In a time of coronavirus induced economic instability — taking RISKS and putting all your eggs in one basket is not a good idea. Today my aim is to walk you through Investing in Gold and Silver for Dummies even in an unstable economic climate. Right now the market indexes are in a state of turmoil, with volatile investor sell-off motivated insanity.
A beginner's guide to investing in gold
Gold and silver have been recognized as valuable metals, and have been coveted for a long time. Even today, precious metals have their place in a savvy investor's portfolio. But which precious metal is best for investment purposes? And why are they so volatile? There are many ways to buy into precious metals like gold, silver, and platinum, and a host of good reasons why you should give in to the treasure hunt. So if you're just getting started out in precious metals, read on to learn more about how they work and how you can invest in them. We'll start with the grand-daddy of them all: gold. Gold is unique for its durability it doesn't rust or corrode , malleability, and its ability to conduct both heat and electricity. It has some industrial applications in dentistry and electronics, but we know it principally as a base for jewelry and as a form of currency. The value of gold is determined by the market 24 hours a day, seven days a week. Gold trades predominantly as a function of sentiment—its price is less affected by the laws of supply and demand.
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Investors always try to diversify their investments and lower their risk. They especially look for so-called safe haven investments that perform better when the rest of the market down. Precious metals are a key driver in markets worldwide. Open an account in under 5 minutes and start diversifying your investments. Of these safe-haven investments — treasury bills, francs, and others, investors consider gold to be the best. Like any other commodity, the price of gold is determined by supply and demand. China, Australia, and Russia are the largest producers of gold in the world. Governments and central banks are buyers of gold. Currently, the U. Private investors are also interested in buying gold and they treat the purchase of gold as an investment.
