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Precious metals can be a valuable addition to any investment portfolio. They hold their value over time, making them invulnerable to inflation. They’re not as volatile as the stock market, and they can protect your wealth during down markets.
But buying and holding precious metal investments can be more complex than you might imagine. Many people think of gold jewelry or silver dinnerware when they think of buying precious metals, but for investment purposes, the best purchase is either physical bullion or precious metal securities. Here’s what you need to know to make precious metals a part of your investment strategy.
Physical Bullion Has to Be Stored
Buying physical bullion — bars, coins, and ingots made out of pure silver, gold, palladium, platinum, or other precious metals — is still the most straightforward and perhaps most common way to invest in precious metals. When you buy bullion, you can take delivery of the metal, which means that if you need access to it, you can keep it close at hand. Investors who are interested in precious metals as a means to make their wealth more portable in uncertain times or as a hedge against full economic collapse may want to keep their bullion in a fireproof home safe, rather than in a safe deposit box or in a precious metals depository.
But the fact of the matter is, whether you take delivery of your bullion or not, it’ll have to be stored somewhere. A safe deposit box might be the best option if you want to keep your precious metal holdings close at hand, but aren’t worried about weathering the kind of full-scale collapse that could see banks close down. Otherwise, you will need to keep your bullion in a depository.
Both options — depository and safe deposit box — come with fees. But storing your bullion in a depository makes it easier to sell when you’re ready to cash in your investment, because you can prove an unbroken chain of custody, and because many depositories handle precious metal transactions for their customers. You’re also less limited in how much bullion you can store in a depository — you may only be able to stash a few gold bars in a safe deposit box, but your depository storage can expand as much as you need it to to accommodate all of your holdings.
Bullion Is a Long-Term Position
If you’re going to buy bullion, you should think of it as a long-term position. Precious metal prices can be volatile in the short term, but the value of precious metals is almost guaranteed to go up over years or decades. So if you want to see a real profit from your precious metal holdings, you need to be prepared to keep them for a long time. And bullion is hard enough to liquidate that it simply isn’t convenient to keep selling and buying it over and over.
Gold Isn’t the Only Choice
Gold is the most popular choice for precious metal investors. Like silver, it has a long history of use as currency, and its inherent properties make it valuable in jewelry making as well as in other industries, like electronics manufacture.
But gold simply isn’t the only precious metal available to investors. Platinum and palladium also have a wide range of industrial uses, and platinum is used in jewelry. Palladium costs about the same as gold, but platinum is cheaper. And if you really don’t have much money but still want to invest in precious metals, you can buy silver, which has a much lower spot price than any of the other precious metals, and can offer you the chance to turn a profit on your investment if demand for silver in industrial applications goes up.
Precious Metals Securities May Offer the Best of Both Worlds
If you’re not sold on the idea of buying gold and silver bars and paying to store them somewhere, you can invest in precious metals exchange traded funds, or buy stocks in mining and streaming companies. Stocks are easier to liquidate when you need to, so you don’t need to feel locked in to holding your precious metals investments for decades. And you can still benefit from the stability and inflation protection that precious metals investing offers.
As long as you know what you’re getting into, buying precious metals can be a great way to protect your wealth from inflation and stock market crashes. There’s never been a better time to buy precious metals.