In these uncertain times, many people are looking for ways to invest that are not very risky and can provide a safe return on investment (ROI). One asset class that’s considered a relatively low-risk investment is precious metals. Precious metals like gold and silver maintain their monetary value even in a bad economy.
There are many ways to invest in gold and silver that’ll help protect your money and provide decent returns. You need to get familiar with the process of investing in gold and silver if you want to profit from it.
Buy Bullion Bars and Coins
When people are advised to invest in precious metals like gold and silver, they can buy bullion bars or coins. This is the most basic way to own gold and silver. It’s also the most tangible form of investment as you have the asset (as bars and coins) in your hand as proof of ownership. You only need to worry about keeping the bars and coins safe, protecting them from being stolen. You may buy your gold or silver for investment from reputable companies like oxfordgoldgroup.com.
Apart from tangibility, a key reason to invest in bullion bars and coins is to avoid counterparty risk. Simply put, this risk is when a person or institution that you entrusted your investment to fails to deliver on their promise. A good example of counterparty risk is when you deposit money in the bank and the bank fails to pay you interest on the deposit. The bank fails on its promise to pay interest because of financial reasons. Investing in bullion bars and coins gives you the freedom to sell them anytime you want. You can also hold on to the bars and coins indefinitely if you want to invest for the long term.
Some believe that ordinary investors, including newbies to investing in precious metals, should buy bullion coins rather than bullion bars. This is because the bullion coins can be easier to handle and store. They’re also easy to manage when you want to sell them because the bars are much heavier. However, bullion bars may be a better choice if you want to invest a large amount of money in precious metals because managing many coins will be difficult.
Invest in ETFs
Instead of holding physical gold, you can invest in exchange-traded funds (ETFs) instead. If you buy gold ETF, the price of the ETF units will change based on the price of gold in the market. You won’t get tangible ownership of physical gold but these can be traded easily. So, there’s no risk of theft and they’re more liquid. However, there’s some (very little) counterparty risk because the exchange may default.
Should You Invest in Gold or Silver?
When you invest in gold or silver, you must figure out whether there will be more demand for the precious metals in the future. Many times, gold is in demand because it can be made into jewelry and is widely used by governments as a store of value. Gold costs much more per ounce and can absorb a large amount of capital. If you invest the same amount of money in silver, you’ll get many more coins. Storing them may be an issue. So, some analysts consider gold as the better precious metal to invest in.
However, others believe that it’s better to invest in silver because it’s costly to buy gold. Silver also has more industrial applications than gold so there is more potential for the price of silver to go up when the supply is diminishing. However, the price of precious metals is impacted by various other factors.
Final Takeaway – Invest But Stay Safe
The key to investing in gold or silver is safety. Investing in precious metals may be necessary to balance your investment portfolio. However, there’s always the risk of physical gold and silver being stolen from you. So, although you may be drawn to investing in physical gold or silver, you should think about how you’ll protect your investment. If you have gold or silver bars and coins at home in a strong safe, will that be a good idea? Can you put your gold and silver in a bank or with a private party custodian? If you don’t want to take the risk of holding physical gold, you can invest in exchange-traded funds (ETFs) instead. ETFs won’t give you tangible ownership of physical gold or silver but these can be traded. So, these are less risky to hold and can be sold more easily.
