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The most common investment vehicles these days are stocks and currencies. Most investment funds spread their holdings over these assets, and fluctuations in their values are what drive the markets. There’s still a place for precious metals though, and in fact they have some advantages that can make them a very attractive – and safe – place to put your money. Gold and silver have traditionally been a safe haven for investments when the economy is doing badly – when share prices are unstable metal prices often rise steadily, offering a way to preserve and increase assets despite poor performance in the markets. They’re not free of risk, of course – metal prices can fall too. They rarely do so alongside share price falls though, so metals make an excellent way to diversify your portfolio for some extra security.
If you’re convinced by these reasons for investing in metals you need to decide what exactly you want to buy. It’s certainly possible to build up a physical collection of precious metal but that’s far from the only way to do it.There are more ways than ever before to invest in gold and silver, and they all have their own special advantages. Here are the most common ones:
All the precious metals – gold, silver and platinum – can be bought as bullion bars. These are available in various sizes, making them a flexible choice. These bars are generally of very high purity and they’re a simple way to invest – the value of bullion is entirely down to the weight of metal. You can buy bullion from brick and mortar stores, online or even from vending machines in some locations.
Several countries produce gold coins, with the best known being South African Krugerrands and British Sovereigns. Coins are available in different sizes – for example a standard Krugerrand contains one Troy ounce of gold, but there are also smaller versions containing a half, quarter or tenth of an ounce. The weight of the actual coin is greater than this because coins are rarely made of pure gold; to make them harder and more durable they’re usually Crown Gold, an alloy that also contains 8.33 percent copper. Prices for gold coins are more complex than for bullion bars – the coin design itself may add value, especially in the case of special editions. Of course this also means there is an incentive to make counterfeit coins, and the value of originals can also fluctuate independently of metal prices. To get the most out of investing in coins some knowledge is always helpful – if you simply want a secure haven for your money bullion is a simpler option.
Storing physical gold can be a worry. If you have a significant reserve of precious metals it’s a tempting target for thieves, so you’ll either need to organize suitable security measures at home or store it in a safe deposit box. One way to avoid this worry, while still gaining the benefits of investing in metals, is to buy bullion certificates. These certificates certify that you own a quantity of physical metal which is securely stored in a central depository. This way the security is handled for you. Of course you’ll pay a slight premium for this and you don’t get the ultimate security of holding the metal yourself, but for many people it’s an ideal solution.
Concentrating investments in a single asset is always risky – it leaves you vulnerable to sudden falls in value. Conventional investment funds spread the risk over a range of assets, usually stocks or currency holdings. It’s also possible to find funds that use the same model for investments in metals. By holding a range of different metals they guard against sudden price fluctuations. These funds are also managed by experts in the market, so if one of the metals they hold begins to fall in price the managers will sell it and switch to those that are rising in value.
This is a way to invest indirectly in metals. When the price of gold or silver is rising it’s likely the value of shares in mining companies will rise too.
This is definitely an option for people who’re willing to spend a bit more time managing their investments and who’re happy to take a risk. Trading in futures involves contracting to buy or sell metals for a set price at a defined time in the future. If prices move in the way you predicted it’s possible to make a large profit. On the other hand if you get it wrong you can end up seriously out of pocket, for example if prices rise more sharply than you expected and you have to buy a supply of gold in order to sell it at a lower price you agreed on.
When you’re aiming for safety the key is always diversity, so look at ways to spread your funds. A mixed portfolio of physical gold and silver, mining stocks and funds will give you the maximum insulation from price falls and the best chance of making money in any financial climate.
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