Gold and Silver Investments: What You Should Know

Gold and Silver were discovered a couple of decades after we started using metals in our daily lives. While other metals have different discovery dates and were put to use as seen fit, silver and gold were very different. During 2500 BC when the granulation of these metals and their alloys started, it was obvious these metals were different. 

Few things made them stand out, their lustre and shine and also how rare they were. But in reality, one could say that these metals are so expensive and valuable only because we all decided they were; our ancestors to be precise. This value is what led to their utilization in different products such as jewellery, investment, and currency. 

In this article, we will look at what you should consider when investing in these metals and the different ways you can invest. 

Ways to Invest in Gold and Silver

Jewellery 

Believe it or not, rappers who spend millions on jewellery aren’t dumb. These jewelleries keep their value at almost the buying price after many years, that’s a good way to save money. Also, the fact that the jewellery is owned by a famous person alone means it would most likely sell many times its original worth.

You can also invest in gold and silver jewellery even if you’re not famous, it is a good way to convert cash to assets. Besides, which other investment can you wear to social functions? If you wish to invest in these precious metals, make sure you get them from trusted dealers because only then can you be sure of their true karat value. Click here to learn more about trusted precious metals dealers.

Bullion and Coins

For many, bullion and coins are the best ways to own physical gold and silver. This is because the form they are in is relatively easy to exchange with other precious metals sellers or convert to cash. Moreover, who doesn’t fancy owning actual gold and silver? 

With precious metals, you earn a profit when the market price goes up. But note that you don’t earn a profit until you sell the metal. When buying precious metals to gain profit, you need to be up to date with current market prices. Neglect doing this and you might miss your chance. 

Exchange-Traded Funds

Not everyone wants the hassle that comes with owning physical gold and silver. You have to bother about storage fees, theft, and others. For people like this, an exchange-traded fund, or ETF for short, is the best way to go. 

The way these works is, the ETF takes direct exposure by buying the metals for you, if the price rises you gain profit. However, if you owned gold and silver yourself you would keep all the profit on sales, but an ETF will charge a certain percentage on each sale for the risk taken.  Visit https://www.investopedia.com/ to learn more about ETFs.

The reason most people prefer exchange-traded funds is that it enables them to sell at the best price. Since you are looking at the price in real-time, you get to sell your investments immediately. This is not the same with physical metals because before you get a buyer and process everything, the price may have moved. 

 

Silver and Gold Mining Stocks

If you were to buy 10kg of Gold and Silver directly, in 5 years it would still be the same size, 10kg. This reason is why some people turn to “mining stocks” as they offer more potential for growth. In this type of investment, you’re investing in a company that mines actual gold and silver. What this means is you benefit if the metal’s price increases and you also benefit if the company’s worth goes up.

The nature of this investment makes it profitable because you’re profiting in two ways. But be careful as it also puts you in danger if you don’t research properly. Before investing in a mining company, ensure you understand it, you could even hire a professional for a second opinion.  

Investing in mining companies isn’t pleasant all around as there are a few drawbacks. In the first place, since you’re investing in the company, events that affect the company could affect you. For instance, the workers could go on strike, or a ghastly accident could happen and destroy the mine. These are just some examples, in reality; the possibility of things going south is high. 

Just like any other investment, there are pros and cons; it’s left for you to choose what works best for you. 

Mutual Funds 

There is a way to hold shares of different mining companies, it is called mutual funds. The main allure of a mutual fund is that it eliminates the time and effort it takes you to find a good mining company. Instead, it gives you access to a pre-vetted list of miners, all you need to do is invest. 

Do not forget that by investing in mutual funds, you instantly have a portfolio containing multiple companies. This variety helps you in the event that one company is doing poorly because the others makeup for it. 

 

Futures Contract

This type of investment is for experts and even they are highly cautious when dealing with a futures contract. To explain what a futures contract is, imagine you enter an agreement with a gold and silver seller to exchange gold for money when it hits a specific price at a specific time. 

Note that with a futures contract, your contract is affected by the current prices. Newbies often get drawn to the investment type because you don’t have to put down the full amount of the metal price, sometimes it can be as low as 20%. This is made possible because the broker covers the excess.

Such conditions might fool you into thinking you have the upper hand which is very far from the case. Since the contract has to be closed at a specific time, it cannot be held indefinitely. So, if the value of the metal doesn’t hit the desired price before the time is over, the trade is closed. 

Final Thoughts

Investing in metals such as gold and silver could be another way to safeguard your funds. The problem most times is deciding how to invest. After reading this article, we hope you understand the various investments methods properly.

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