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How to Invest in Gold and Silver

Discover how to invest in gold and silver. For centuries, people have valued precious metals like gold and…
How To Invest In Gold And Silver

Discover how to invest in gold and silver.

For centuries, people have valued precious metals like gold and silver for their use as money, investment, and symbols of wealth. Investors like them because they’ve been valuable for a long time, are not closely linked to unpredictable financial markets, and can help protect against inflation. But there are drawbacks too like it might be hard to sell them when needed, and they don’t generate income.

As inflation increases from very low levels and financial situations become more uncertain, it’s no wonder that interest in gold and silver is growing again. To help you begin, we’ve gathered the best tips for investing in gold and silver and answers to common questions.

Investing in Gold and Silver ETFs and Mutual Funds

Some risks are reduced when you buy silver and gold through financial instruments. Storage and insurance become someone else’s responsibility, but you won’t have something physical to hold. Many funds available today allow investors to access gold and silver, which can be bought using regular brokerage accounts.

Some funds represent direct ownership of silver or gold, holding only those metals. Others cover the precious metals sector more broadly, including other metals besides silver and gold. These funds aim to follow the price movements of specific precious metals indexes or the price of a specific metal.

Gold and silver funds are a way to invest in precious metals without dealing with storing, buying, or selling them yourself. These funds offer more liquidity, meaning you can easily add or remove holdings without dealing with physical items. Although they may not track the exact price of physical gold or silver, they still provide diversification without the costs of storing physical metals.

Gold and silver funds usually invest in physical gold and silver bars but allow trading shares globally. Some funds are invested in companies’ stocks that mine these metals. We’ll explore these investments further next.

Compare Top Investment Platforms

Platform Type Account MinimumFees
Merrill EdgeOnline Broker$0Stock trades cost nothing. Options trades cost nothing per leg plus $0.65 per contract.
E*TRADEOnline Broker$0Stock and ETF trades have no commission. Options cost between $0.50 and $0.65 per contract, depending on how many contracts you trade.
BettermentRobo-Advisor$0, %10 to start investingFor the investing plan, there’s a fee of 0.25% per year or a $4 monthly fee for balances under $20,000. For the premium plan, the fee is 0.40% per year.
WealthfrontRobo-Advisor$500 for investment accounts, $1 for cash accounts, $0 for financial planningMost accounts have a fee of 0.25%, and there are no fees for trading, withdrawals, minimums, or transfers. For 529 plans, the fee is between 0.42% and 0.46%.
EmpowerRobo-Advisor$100,000.49% to 0.89%

Investing in Gold and Silver Mining Stocks

Gold and silver mining stocks are greatly affected by the market price of their deposits, but it’s not always a direct match. Miners are judged based on the quality of their deposits and how feasible it is to extract the metal, and this evaluation changes whenever the market value of those deposits changes.

The mining industry also has different segments, including junior mining companies in the exploration and development phase. These companies search for land with the potential for large mineral deposits. Junior mining stocks can be more volatile than major mining companies, which are more stable and track metal prices closely based on their established deposits. Major mining companies are also more likely to pay dividends when prices are high.

While individual gold and silver mining stocks are available, investors might prefer sector ETFs like the VanEck Gold Miners ETF (DGX) or iShares MSCI Global Silver Miners ETF (SLVP). These ETFs offer a dividend yield and value appreciation mix, similar to individual stocks. If you’re set on investing directly in specific stocks, it’s crucial to understand the industry and learn about preliminary feasibility studies, reserve estimates, and valuation methods.

Cpi Vs. Sp 500 Graph 4 1
Source: fidelity investments is a company that helps people manage their money.

Investing in Gold and Silver Futures and Options

Gold and silver can also be traded using financial tools like futures and options. With futures, you can bet on metals prices using leverage on specific exchanges. But be careful: If you don’t roll over your contract before it ends, you might have to take delivery of the metals.

Unlike owning gold to protect against inflation or market drops, traders use gold futures to make risky bets on gold prices without getting the metal. But be aware that trading with leverage can increase both your gains and losses.

Similarly, gold and silver options are contracts based on futures or physical metal prices. They require less money upfront so that you can use more leverage. If the option expires without value, you’ll lose what you paid, but your profits could be big if it works out.

These options and futures aren’t only available on the Chicago Mercantile Exchange (CME), but it’s a well-known place to learn about them. Remember, this type of trading is riskier and not for beginners just looking to protect against inflation.

You’ll need a brokerage account with margin and good charting tools to start trading like this.

Best Futures and Options Brokers

Company Account Minimum Fees
Interactive Brokers$0 Stock trades cost nothing, opening options trades cost $1 (up to $10 per trade), and closing options trades are free.
E*TRADE$0 Trading stocks, ETFs, options, and cryptocurrencies are commission-free, although a small markup is included in the prices.
TradeStation$0 It costs $1.50 per trade for each side, plus additional fees like NFA, exchange, and overnight position fees. For micro futures, the fee is only $0.50 per trade.
Webull $0 Stock trades cost nothing, opening options trades cost $1 (up to $10 per trade), and there’s no fee to close options trades.
 tastytrade$0Stock trades cost nothing, opening options trades costs $1 (up to $10 per trade), and closing options trades is free.

Investing in Physical Forms of Gold and Silver

Throughout history, people have invested in gold and silver by owning physical forms of these precious metals. This started with jewelry and progressed to coins and other standardized forms. Today, investors can choose between two main types: bullion and jewelry.

When buying physical gold and silver, you typically go through a dealer, either online or in person. Reputation is important when choosing a dealer and considering the markup and fees they charge. Dealers are crucial because they verify the metal’s purity and often provide additional services like storage and insurance.

Investing in Gold and Silver Bullion

Gold and silver are dug out from the earth’s crust and refined before being mixed with other metals to strengthen them for different uses. For example, gold is mixed with silver or copper to make jewelry more durable, while gold bullion is kept as pure as possible.

Bullion refers to physical bars and coins. Bars are rectangular pieces of gold or silver at least 99.5% pure. They come in various sizes, from small to large, with a stamp showing their weight and purity. It’s important to buy from a trusted dealer because counterfeit versions exist.

In the past, gold bullion was important for countries because it backed some currencies. But since the 1970s, currencies haven’t been backed by gold anymore. People often turn to gold bars during financial crises to protect their money.

Investing in gold and silver bullion comes with challenges. They must be securely stored, insured, and physically sold to make a profit. Gold bars can be stolen, and larger bars can be harder to sell. This means investors need to consider the size of the bars and where they’re kept.

Some people store their bullion using a service, which adds costs and can reduce profits. Also, although bars are very pure, they still have added value and come with fees like shipping and insurance.

How To Invest In Gold And Silver
Source: patriot gold group is a company that helps people with gold investments.

Investing in Gold and Silver Coins

Bullion, gold, and silver coins are a mix of an investment and a collectible. Unlike plain bullion bars, these coins have value because of their looks and rarity, so they’re priced higher than their metal value. The prettier or rarer a coin is, the more it’s worth to collectors.

Gold coins come in different sizes, like ounces or fractions of ounces, and are sold for more than just their metal value when first made. Their value can go way beyond their metal value if they become collectible and people want them. Usually, though, their value is tied to the price of gold.

American Gold Eagles, Canadian Maple Leafs, and South African Krugerrands are famous gold coins from their countries. Like the government’s coin-making offices, Mints are the only ones allowed to make legal coins. The U.S. Mint releases a schedule of new coins for collectors.

Since gold and silver coins aren’t just valued for their metal, they’re more like collectibles than investments. You can buy them from dealers or straight from mints, but there are extra costs like markups and fees. But because they’re smaller than bars, shipping costs are usually lower. Coins offer some of the same benefits as bars for diversifying investments and not being tied to the ups and downs of financial markets. However, they also need safe storage and insurance for big collections.

How To Invest In Gold And Silver

Investing in Gold and Silver Jewelry

When investing in physical gold and silver, jewelry is the least traditional option. The price markup for jewelry can be much higher than the actual value of the metals it contains. Jewelry is more like art than plain metal bars, and pieces with famous owners can be worth much more.

While jewelry with precious metals is more commonly traded than bullion, it’s harder to find trustworthy dealers in the secondhand market. Authenticity and purity are important when pricing jewelry, but a piece’s looks or history can greatly change its value.

Even though jewelry can still protect against inflation and hold value, its value is more subjective. Because of this, the risks of fraud and the need for secure storage and insurance are higher. Jewelry is seen more as a collectible than an investment because it doesn’t give a regular income.

What You Need to Open a Brokerage Account

The kind of brokerage account you require relies on your precious metals investment plans. A basic brokerage account is sufficient if you invest in silver and gold funds or mining stocks. However, if you plan to trade futures and options, make sure the brokerage offers these services.

Personal Information

To open a brokerage account, you must provide the same basic personal information as you would for most financial accounts. This includes:

  • Your name, address, and phone number are required to open a brokerage account.
  • Your tax identification number, usually your Social Security number, is needed to open a brokerage account.
  • You must provide your date of birth and a government-issued ID to open a brokerage account.

Since many brokerages are now online, you’ll probably need to provide an email address to sign up. Before you start investing, you’ll need to answer questions about your income, experience with investing, how much money you have, and other details. These questions help the brokerage better understand you as part of the know-your-client rules.

Minimum Deposits

Nowadays, many brokerage accounts don’t require a minimum deposit. You can start with little money if you want to invest in gold and silver using ETFs. Some brokers even let you buy fractions of shares in these ETFs.

Best Online Brokers

Company  Account Minimum Fees
Stock and ETF trades cost nothing, while options trade costs $0.65 per contract. $0Trading stocks and ETFs don’t cost any commission. For options, it’s $0.50 to $0.65 per contract, depending on how much you trade.
Interactive Brokers$0 There’s no commission for trading stocks and ETFs on IBKR’s TWS Light. For active traders who want advanced features like order routing, costs are low and depend on how much you trade.
Charles Schwab$0 Stock and ETF trades cost nothing, while options trade cost $0.65 per contract.

What You Need to Open a Gold IRA

Gold individual retirement accounts (IRAs) are a bit different from regular IRAs because a custodian has to hold the physical gold. You can’t keep your gold IRA bullion at home. To set up a gold IRA, you first create a self-directed IRA, choose a custodian to manage the account, pick an approved depository to store the gold, and then select a broker/dealer to buy the gold. Custodians specializing in gold IRAs can help clients find an approved depository and gold dealers.

Warning: According to the Commodities Futures Trading Commission (CFTC), precious metals dealers might not be licensed or registered to give investment advice to regular customers. They usually work as salespeople and earn commissions from the products they sell. Unlike financial professionals who must put your interests first, these dealers don’t have to. So, they might suggest products that earn them more money rather than what’s best for you.

Personal Information

The documents needed are the usual ones for investment accounts:

  • Your name, address, and phone number are required.
  • Your tax identification number, typically your Social Security number, is needed.
  • Your date of birth and a government-issued ID are required.
  • Extra questions for Know Your Client (KYC) purposes are also required.

Minimum Deposits

Minimum deposits for a gold IRA can be high because the price of a one-ounce gold bar is over $1000, and you can only keep those approved coins in your gold IRA as per IRS rules. While some gold IRAs don’t mention a minimum, others start at $10,000, $25,000, or even $60,000.

Tip: Companies like Augusta Precious Metals are great at teaching people about common scams from gold and silver dealers, and their products are made to help customers avoid these scams.

Augusta Precious Metals offer: FREE GOLD when you start a gold IRA and NO fees for up to 10 years (everyone can get this).

Best Gold & Silver IRAs

Company  BCA RatingAvailable Metals  Minimum Investment
Augusta Precious MetalsAAAGold, Silver$50,000
GoldcoAAAGold, Silver$25,000
Patriot Gold GroupAAGold, Palladium, Platinum, Silver$25,000

Factors to Consider When Opening an Investment Account

When you’re opening an investment account, the most important thing is if you can get the assets you want. Once that’s sorted, picking between accounts mostly compares fees and what they offer. If you’re investing in silver and gold through financial derivatives, many brokers can help without charging much. But if you’re focused on a gold IRA, the fees can vary a lot between companies, and you’ll also need to think about the markups and fees from the dealer. It’s a good idea to review the disclosures and fee lists once you’ve narrowed your choices to a few good options.

FAQs

1. How Do I Invest in Gold and Silver for Retirement?

Ans: Investing in gold through a retirement account can help protect your money from inflation and give you a stake in an asset that’s a safe investment during tough times in the financial markets. If you have a traditional IRA, you can easily invest in gold by buying shares in gold ETFs through your brokerage. But if you want to own physical gold in a tax-advantaged account, you must set up a self-directed IRA with a custodian and an approved storage place. Finding the right company to help with a gold IRA can simplify the process.

2. What’s the Best Way to Invest in Gold?

Ans: There isn’t just one right way to invest in gold. Bullion bars are cost-effective if you want physical gold because they’re valued more for their purity and weight than their appearance. An ETF is a good choice for gold as a financial safety net in your investment portfolio because it’s easy to buy and sell. If you’re interested in trading based on gold’s price movements, options on gold futures can be a good option because they require less money upfront and offer leverage. The least recommended ways to invest in gold are through bullion coins and jewelry because their value is more about their appearance, and they’re seen more as collectibles than investments.

3. Should I Invest In Gold?

Ans: Gold can be a good addition to your investments to balance out risks, but it’s not the right choice for everyone. If you don’t have other investments like stocks or bonds, you might want to focus on those before considering gold. Holding all your wealth in gold means you might miss out on potential earnings from other investments, and sometimes gold doesn’t perform as well as other options. However, investing in gold through an ETF is a safe and affordable way to get started if you’re interested. Just make sure you understand what you’re investing in before you start.


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