If you are just beginning to invest in precious metals, there are things that you need to know. You don’t want to make mistakes and invest in the wrong things. You want to make sure that you will make money with your investments.
Gold, silver, platinum, and palladium are the most common precious metals that you can invest in. These are the ones that can make you the most money, as well. You can learn more about these metals.
Before you buy them, you need to check reviews about the brokers that deal with them. Check to see if there are any complaints about the brokers. See how many good reviews they have, as well.
This article will help you to learn more about investing in precious metals. It will give you some tips that you can use. You can also do more research to get the information that you need.
Ways to Buy
1. Coins – One of the most popular ways to buy these precious metals is in the form of coins. There have been coins made of gold and silver as far back as the ancient worlds. They were still issued as regular money up until the beginning of the twentieth century.
Governments still mint these coins, but they are for collectors and investors and not for everyday use. These are popular among investors because they are small and easy to handle. You can buy many coins and keep them in a safe or safe deposit box at your bank.
The coins that are minted by different governments usually have a symbol that represents those countries. The United States has the American Eagle coins, China has panda coins, and Canada has Maple Leaf coins. People collect these coins because they want to have at least one from each country.
2. Bars – Bars, or ingots, are another way for people to invest in these metals. The bars haven’t been used as money; they are more used for investors. They are the easiest way to stack the metals.
These are the least expensive way to invest because they are generic looking in nature. They are minted by governments much in the same way that coins are but have no special symbols on them to represent the countries. They usually just have their weight and value stamped on them.
Bars are the most popular way to invest in gold, silver, platinum, and palladium because of the reasons listed above. Collectors don’t collect them as often because of their generic nature. Ingots are still very impressive looking ways to invest.
3. Rounds – These are shaped like coins but have no monetary value like ingots. Rounds have been around since the 1970’s. Learn more about rounds here; they are usually only made of gold and silver.
These rounds are also called medallions and come in decorative designs. They are more for collectors and less so for investors. They come in different designs from different countries.
4. Paper – There are paper ways to invest in these metals, as well. Some of the most popular are gold ETFs, gold mining stocks, gold futures, and mutual funds. They are explained in more detail below.
a. ETFs – Exchange traded funds, or ETFs, are products that are backed by gold, silver, and platinum. Palladium is not included in this form of investment. They are issued as shares and are traded like stocks.
SPDR Gold Shares and iShares Gold Trust are the most popular options for precious metals ETFs. These shares cannot be exchanged for precious metals, you will get cash when you sell them – you will also have annual fees for holding them. If you are buying metals from a financial advisor, they will probably be ETFs.
b. Mining Stocks – These are usually just called gold or silver stocks. They are shares of companies who mine for gold and silver. This is one of the easiest ways to invest in precious metals.
This is an indirect way of investing in gold and silver. The values of these stocks go along with the price of these metals – they rise when the cost of gold and silver rise. You can watch these prices to see how your stocks are going.
Mining stocks are sold as common stocks on the exchanges. These prices are often more volatile than buying other forms of gold and silver. There are many factors that can affect the price such as economic growth.
These stocks have a bigger potential gain than metals do. These are more complex investments than buying silver and gold. The companies can pose a higher credit risk, as well.
c. Futures – Futures contracts are promises to buy a bulk amount of a commodity or an asset at a future date. They are traded on exchanges similar to stocks. These are primarily used by banks, jewelers, miners, and gold dealers.
This helps to prevent these institutions from falling or rising too quickly. Some activity in the futures market is also done by speculators who are trying to predict which direction the prices will move in the future. You must have a substantial investment that is over one hundred thousand dollars to enter a position in the futures market.
d. Mutual Funds – These funds allow you to invest in any type of paper gold such as miners, futures, and ETFs. This method is preferred by some investors because it is a hassle-free way to get gold into their investment portfolio. The different paper forms of precious metals contrast with buying physical bullion.
What is Bullion?
Bullion is the purest form of these metals. It is the investment grades of precious metals. Bullion produces bars and coins. It is different from antiques, jewelry, and collectibles that are made from these metals – it must be 99.5% pure metal to qualify as bullion.
This difference is important because of the price. Bullion prices will always be close to melt value. There will be a small premium that will be above this price that covers costs such as labor, manufacturing, and overhead.
With jewelry and collectibles, there will always be a huge mark-up. This premium is way above the intrinsic value of the value of the metal content that is in the items. This is because people value the beauty of these items.
Tips on Buying Physical Metals
1. Prices are Always Fluctuating – First-time investors rarely think about the fluctuating prices of precious metals. This can lead to frustration and confusion for them. It needs to be explained so that they can understand.
The prices aren’t just made up as they go, they are determined by supply and demand. This means that the prices are determined by the consumers. When consumers are buying a lot, the prices go up, when they aren’t buying, the price goes down.
Throughout the day, the prices are continuously fluctuating. They can change in a matter of seconds. The price at the moment that you commit to buying the metal is the price that you will pay.
If you cancel the order after committing, you will be charged an enormous cancellation fee. You will also be charged for any market loss. This is done to prevent scammers from manipulating the system.
2. Bullion Products Can Be Privately Minted or Government Issued – There are two ways that you can get your bullion products – from a private mint or from the government. This is regardless of the type of metal that you are trying to purchase. These are for finished precious metals products.
a. Private Mints – If you buy from a private mint, it is likely to be less expensive. They can also provide more designs for you and have more artistic freedom. This might help you to find a unique design if that is what you are looking for.
b. Government Mints – Your metals will be legal tender because it is government issued. It is backed by full faith and the credit of the government that is issuing it. This means that it will be slightly more expensive, but morelikely to be worth the price.
Bullion coins are more likely to be more liquid if they come from the government. This means that they are easier to turn into cash than if you bought from a private mint. This will help you if you need money quickly.
Precious metals are investments that many people seek out to buy. There are many ways to buy them. There are also many things that you should learn before you buy.