Today you are going to learn the best way to invest in gold and silver. This is a different enough concept to warrant its own unique article, which will go further in-depth into explaining the nuances of investing in both of these precious metals.
Why is there such a difference? Because silver is more volatile, has lower cost barriers to entry, and is a better platform for turning a quick profit. On the flip side, gold is more stable, offers the historically accepted hedge against inflation, but is much more expensive to purchase. You cannot simply rush into investing in these two wildly different metals by using the same investment strategy for both; doing this is playing with fire, and that is a game you are unlikely to win.
Instead, when investing in both gold and silver you need to play a more level-headed game, and use the benefits and drawbacks of each of the metals to achieve the best profit possible (or at the very least avoid losing money) By reading through this post you will get a far better idea as to the ins and outs of a nuanced precious metals investment strategy.
Investing in gold
Let us first deal with the most important of the precious metals- gold. If you are a new or beginner investor with very little experience, or you do not have huge amounts of money to play with, then you should use the relative stability of gold to afford you a greater level of protection from volatile price swings. Whilst it would be foolish to assume that you cannot easily lose money with gold, it is all about relativity. Compared to silver, gold has a track record of being more stable.
Therefore, you should take the approach of investing a proportion of your money in physical gold, or gold ETFs. Just let it sit there, gaining value as inflation ravages traditional investments and currencies (such as increasingly worthless paper money) If you are a beginner investor then you should be holding some gold as a store of value and purchasing power against inflation; do not get carried away with trying to ‘trade’ and make big profits, as this will likely lead to disappointment, and even quite substantial loss.
Investing in silver
Now let us turn our attention to silver, which is a popular subject of consternation amongst the precious metals brigade. In fact, even slightly criticizing the prospects of silver often garners a very aggressive response from certain elements in the precious metals community (the ‘silver will go up a dollar a day ad nauseum brigade) However, as the events of the past month have shown silver is extremely volatile. And yes, whilst it is capable of spectacular price rises, it is also capable of even more spectacular price collapses.
Therefore, you should use silver more as a vehicle for a bit of speculation. If you are new to investing then do not throw caution into the wind and do anything rash; this means avoid leveraged silver investments, or doing stupid things like trading your wife and kids in for silver bullion. Instead, use the lower price barriers of entry present in the silver market to buy a few dozen ounces of a silver ETF, then sell when the price rises enough to return a healthy profit. Don’t get too greedy and assume the price will rise indefinitely- this is asking for a financial bruising; therefore, it pays to sell when you reach a profit level you are happy with. You shouldn’t hold out for ‘silver to the moon’ theories (until hyperinflation hits)
And if the price falls? Do not panic sell your silver. Just remember that it is prone to big price rises, followed by big price falls. In the long run the outlook for silver is positive- there is too much paper money starting to flow around the system, which is highly inflationary.
Ways To Invest In Gold For Beginners
There are various forms of gold you can be able to invest in. These include physical gold such as bars, coins, and jewelry. Gold mutual funds are also great sources for investments. You do not own the gold reserves found but the monetary currency represented by them.
Another form which is closely related to mutual funds is gold exchange trade funds or ETF’s. Some of these maybe a branch out of certain mutual fund investments but in general they are different due to the presence of physical gold attached to a stock. The real gold in bullion represented by your stock is safeguarded and kept by the sponsoring company.
Digital gold currency or DGC is another gold form. These are electronically represented gold which can be cashed out when needed. Printed versions are also called paper gold and earlier forms of this are gold certificates which were in circulation from the late 1800′s until the early 1900′s in the U.S.
Size of Investment
Aside from the type of gold you will invest upon, how to start investing in gold also involves how much gold you are going to invest. You should start deciding on this now by taking into consideration how much you are capable of buying.
For those who choose physical gold, it is notable to know that the cost per item becomes cheaper as you purchase more. This can be said of gold bullion including bars and coins. Just like the benefits of purchasing wholesale in supermarkets, buying gold in bulk is cheaper than buying one piece at a time. As for funds of whichever type, the price of assets per percentage is often the same regardless of how much stock you are going to buy.
Dealer and Sponsor Companies
Should you choose physical gold, the next consideration is who to buy them from. There are various dealers with portfolios all over the internet. You can pick a dealer based on a few factors such as the length of their history with this type of business and how many people have they been able to sell gold coins and bars to.
The former does not necessarily mean that a new dealer is not recommended. Although more tenured dealers are preferable, newer ones may have benefits offered which others do not. It is notable that there is one dealer who uniquely and solely provides warranty for his gold products.
The latter does not count the heads. It checks how many of these people who availed a dealer’s products have been satisfied by it. Herewith quality actually beats quantity. If you are still unsure, you can ask people who have gold investments as well to recommend a reputable dealer that you can transact with.
In case you choose gold funds, there are many companies who offer their assets to those who trust in investing mutual funds with them. Look for those with reputable names in the gold business.
For ETF’s, gold mines and reserves with physically backed up gold items can be invested upon. These may either operate locally or are also offering services worldwide.
Even beginners can benefit from basic guides in how to start investing in gold. This ensures that new investors have enough heads up before embarking on a journey in gold investments. The more knowledgeable you are about the gold industry, the more successful you will be in your investment.