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Kyle Jernigan - March 21st, 2022

Investing in Gold and Silver: How to Do It

Silver Bar Germania Mint

During the rollercoaster that was the global pandemic, one of the few commodities that remained relatively stable was gold. Silver and platinum came close, with some fluctuations. Yet despite being a stable investment, do you know the other reason investors choose precious metals?

If you have a portfolio, then you should consider them for a number of reasons. Read on as we discuss everything you need to know about investing in gold and silver.

Gold

Gold has been prized for its unique qualities since the dawn of man. It is extremely durable, malleable, and is a great conductor of both heat and electricity. This means that aside from its natural beauty desired for jewelry, it is also used in manufacturing.

 All of these factors contribute to its unique placement in the market. Gold is viewed as a stable investment that people often turn to when stocks and shares are uncertain or in a downturn.

 Prices for gold change constantly and are set 24 hours a day, 7 days a week. However, unlike most other commodities, its price is dictated less by supply and demand.

 The reason for this is the amount of gold that people have stockpiled above ground. If a new supply is found, it is quickly absorbed and prices rise. When the people who have stockpiled decide to sell, the amount drops.

100 gram Valcambi Suisse Gold

100 gram Gold Valcambi CombiBar.

Silver

Silver is a much more volatile metal than gold. While it is used to store wealth, it also has more uses in the industrial markets. Supply and demand impact its value more as a result.

 One factor that has buoyed it considerably in recent years is its use in electrical appliances. Everything from medical equipment to batteries requires the use of silver and as markets emerge, the demand for it will only increase.

Ways of Investing in Gold and Silver

Precious metal investing does not just have to be done by buying the physical assets. While it is one method, there are many others available to you.

Investor Crate Silver

Investor Crate monthly Silver subscriptions.

Physical Purchases

There are a number of ways in which physical metals can be bought. These can include gold bullion, coins, or even in the form of jewelry. You can store them in a third-party depository or keep them at home and house them yourself.

 This is appealing for many people, as they are tangible, liquid assets. Should economic hardships fall, physical metals can be immediately traded for whatever is needed.

 The downsides are that buying physical assets often means you pay over the market price. Gold and silver need to be shaped, stamped, shipped, and stored. All of this can hike up the cost.

Commodity Exchange Traded Funds

Exchange-traded funds allow you to invest in gold, silver, and platinum. All of this takes place without actually taking hold of the physical asset. They reside in a brokerage account, so you don't hold the asset but instead have a share in them.

 The fund's operator will be in charge of storing and managing the physical asset. When you choose this investment check what you are getting into, as some ETFs count as collectibles and do not get the same tax rate.

1 oz Gold Bar

1 oz Gold Bar by Asahi Refinery.

Gold Futures

When you use futures to invest in gold, you can get a lot of leverage. This means you can own a lot of gold for a relatively low amount. Should the gold market move in the way you have predicted, you can make a lot very quickly.

 The downside is the dangers inherent in any speculation. Should the price of gold go the way you have not predicted, you need to put up the margin or take a loss. You may be able to make money quickly, but you can also lose it just as sharply.

Mining Stocks

Another way to invest in precious metal is to buy into the companies that mine it. For investors, when the price of gold goes up the company profits go with it. The company can also raise production, creating a two-pronged attack.

 By investing in stocks, you are negating some of the benefits of precious metals and their security. Make sure you check the credentials of mines you are investing in, as some may not be in good standing.

Advantages of Investing in Gold and Silver

Gold and silver both have a number of advantages over other forms of investing. The first factor to attract investors is that generally, the return on gold and silver often outperforms stocks and bonds. When buying physical assets, they also have the liquidity that is easy to convert into cash.

 Metal investing also has a low correlation to stocks and bonds. This is one way to diversify an investment portfolio. When the stock market dips, then metals could stay where they are or rise in value.

 Gold, in particular, is often perceived as a defensive investment. If threats occur to the economy or are perceived to, then many investors will retreat to the stability of gold.

Gold or Silver?

Both gold and silver have several advantages and disadvantages. Silver has more ties to the global economy. While this offers less stability, it may also allow you to make a profit quicker than if you had invested in gold should prices rise.

 Silver also makes a great inflation hedge. When the value of the dollar drops, precious metals rise as they are cheaper to buy using other currencies. Of these, silver tends to rise quickest.

 This of course mean silver is more volatile. Gold offers stability in an investment portfolio. As gold has less correlation to stocks, it becomes an even more powerful diversifier.

Investing in Gold and Silver

Now you know the benefits of investing in gold and silver, consider which method is best for you. How much risk are you willing to take on? Do you want stability in your investment or just diversification?

Investor Crate should be your first stop for passive investments. We can provide you with monthly precious metals to hold for a rainy day. Click here to see all of our amazing combo crates.

This is in no way to be considered investment advice. Past performance is no guarantee of future results. Asset allocation and diversification do not ensure a profit or guarantee against a loss. Keep in mind that any form of investing involves risk and you should always consult with your financial advisor before making any financial decisions. Investor Crate, LLC., it's subsidiaries and staff will never advise you on any asset as our aim is to provide a fun and affordable service should you decide to purchase Precious Metals.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

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20 comments

  • Jerome BrownellOct 03, 2022

    Consistency is the key.
    Bit by bit.

  • Jerome BrownellSep 28, 2022

    I definitely prefer physical ownership of my precious metals.
    No games that way.

  • Jerome BrownellSep 28, 2022

    Great info. Thank you

  • Robert BurnsSep 28, 2022

    I think ETFs are the way to go for me.

  • Gerald SandersSep 28, 2022

    Great blog! Iā€™m just beginning and need all the help I can get!

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