There’s a reason why precious metals, especially gold, have long been valued by investors and society at large. Part of the picture is that precious metals are rare, but they’re also valuable because of their inherent qualities. Gold, for example, never rusts or corrodes, is malleable and easy to work with, and conducts electricity well — not to mention, it’s pretty and shiny. Other precious metals, like silver, palladium, and platinum, also have qualities that make them valuable in industry and jewelry fabrication.
Because they have intrinsic value, precious metals don’t inflate like fiat currencies do. In times of economic uncertainty and political instability, investors tend to turn to precious metals for their perceived stability and worth. If you want to invest in precious metals, you can buy bullion, but that’s not your only option. You can also put your money into exchange traded funds (ETFs) and exchange traded notes (ETNs). You can even directly buy stocks in mining and streaming concerns, or assume a higher degree of risk and invest in futures and options. Let’s take a look at some of your options.
Buy Bullion
The most straightforward option for investing in precious metals is also the purest — simply buying gold, silver, palladium, or platinum bars and coins. Investing in bullion is accessible to everyone, because bullion is available in weights as small as one gram, so if you can’t afford an entire troy ounce of gold, you can buy a 5-gram gold bar or a 1-gram gold bar.
Besides, not all precious metals have the same value. Gold is the most expensive, and the most popular, with perhaps the highest demand in industrial and jewelry making applications. Platinum and palladium are also pricey, at least when demand is high. But silver is often very affordable. You can buy a large, 100 oz bar of silver for roughly the same price as a five-gram bar of gold. Of course, silver is less portable than more expensive metals, but its pricing is volatile enough that you have a better chance of selling your silver holdings at a time when demand is high and supply is low.
If you buy bullion, though, you’re going to need to safely store it, and that usually means storing it in a precious metals depository or in a safe deposit box. Some investors do keep their bullion in home safes, but you can quickly run out of room to store your bullion if you go that route. You’ll also need to enhance your homeowners insurance to cover the value of the bullion in case it’s lost (for example, in a fire or flood) or stolen. The best solution for investors who want to buy bullion is to buy it from an established precious metals dealer that will store it for you and buy it back from you when you want to sell it.
Invest in ETFs and ETNs
Bullion isn’t the only option for investing in precious metals. If you can’t be bothered with owning the physical commodity, you can still reap the benefits of owning it by investing in precious metals ETFs and ETNs. These funds invest in precious metal holdings as well as in mining and streaming companies, with the goal of tracking the spot price of the precious metals they invest in. Precious metals ETFs and ETNs are a good way to get exposure to precious metals without the hassle of buying (and then having to store) bullion, and these securities are easy to liquidate whenever you’re ready to sell.
Buy Securities
In addition to ETFs and ETNs, you can also invest in precious metals mutual funds, which are similar to other mutual funds in that they invest in a range of different mining stocks around the world, and some also hold physical metals. Mutual funds are among the best precious metals securities for the investor who doesn’t know much about the mining industry, but you can also buy stocks directly in mining firms, too. To do so successfully, however, you or your financial advisor should have an understanding of the mining industry.
Trade in Futures and Options
Futures and options bring the highest potential for returns, but they also carry the highest risk, and they’re really not something that the casual investor should be buying into without guidance. If you have a high tolerance for risk and want to make big bets on the precious metals market, investing in these derivatives could be for you.
Precious metals investing is more than just buying bullion. There’s a whole world of securities available for investors who want exposure to precious metals. It’s time to choose the right precious metals investment vehicle for your financial needs, and start benefiting from the power of precious metals to protect your wealth and help grow it over time.