3 Questions You Need to Ask About Investing in Precious Metals

Precious metals investing will radically alter the way you see your savings. If you have a typical retirement savings fund, your money is probably invested in a mixture of stocks and bonds. That’s a good, solid way to start saving for your retirement years – until something happens. And something always happens. It’s just the way the economy was designed.

As soon as these predictable things happen, your traditional portfolio will start to disappoint:

  • The stock market crashes, and you lose a significant chunk of your savings.
  • Inflation outpaces bond interest rates, and your locked-in, long-term investments actually lose purchasing power.
  • A recession creates market volatility.

These are factors that drive investors to safe haven assets like precious metals. But before you start buying gold and silver, there are 3 questions you should answer.

#1 What is the best way to buy silver or gold?

The two most popular ways to invest in metals are ETFs and bullion (coins and bars). ETFs (or Exchange Traded Funds) are funds that own bullion; you own a share of the fund, not bullion itself. It carries more counterparty risk, as you rely on the institution to act responsibly and in the best interest of its investors.

The easiest way to minimize that risk is buying bullion. Luckily for investors, it’s easy to buy silver and gold in bullion form. One of the fastest ways to make a silver investment is buying coins or bars online. You can have them shipped discretely with insurance to your home, bank, or sent directly to a third-party storage facility.

#2 Should you buy silver or gold?

That depends on how much money you’re investing:

  • Under $2,000, it makes sense to make a 100% silver investment. Buying the cheaper metal will let you take advantage of volume discounts and storage shouldn’t be a problem.
  • Under $10,000, it makes sense to split your investment 50/50, or if you’re more growth minded, 70/30 in silver’s favor. 
  • Over $10,000, gold becomes the better purchase. When you’re investing that sum of money, storage becomes an issue with silver. However, if you want to see bigger silver growth, you can buy a 70/30 split in silver’s favor.

Your investment goals also matter. If you need growth in a non-equity, silver will deliver more bang for your buck. It’s a more volatile metal and its prices move faster in both directions. When the market starts to change, the white metal follows, but quickly outpaces gold. Long-term, it looks like gold outpaces silver because it maintains a higher price bottom. In the short term, silver goes higher, faster. Deciding which metal to invest in is all about identifying your personal financial goals and picking the right vehicles for them.

Demand for silver comes from industrial, commercial, and consumer sources, such as electronics, solar power, jewelry, bullion, and the health industry.

#3 What silver coins should you invest in?

The most common coins are American Silver Eagles and Canadian Maple Leafs. These bullion-grade coins from North American mints are widely traded around the world. The premiums are relatively low and they are the easiest to sell when you’re ready to turn your investments back into cash.

Do your savings a favor and take advantage of gold and silver investing.

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