Guide To Investing In Gold And Silver

Different Forms Of Physical Gold For Investment

Several different types of physical gold exist when it comes to investing in gold. One of the most common types of physical gold is bullion. Most bullion takes the form of a slip of gold. A miniature bar that is made up of .999 purity gold.

Gold coins can also be considered bullion. A bullion coin is a standard piece of gold that is commonly trade. In general the purity is the same as a slip of bullion.

On the other hand there are numismatic coins that can also be invest in. These coins have more value than just the precious metal that they contain. That is because these are the type of coins that collectors trade in. While they may be a great option for when the financial world is doing well, if you want to be safeguarded, they are not a good option.

If the financial world isnt doing well, buyers are looking to pay for the precious metal, not the collectors piece. This can make it hard to get the full value of a numismatic coin.

What Is The Difference Between Allocated And Unallocated Gold

In a nutshell, allocated gold is solid bullion that is owned by someone. Owning allocated gold is the only way to properly own bullion and is independent of the price that banks give it meaning it is the ultimate safe investment. You might need to pay a little more in the way of storage costs, but allocated gold is the truest way to invest in this commodity.

Unallocated gold is an imitation of gold investment. The gold remains in the property of the bank and is backed by a banks reserves, meaning that buyers in allocated gold are effectively investors in the bank and receive premiums in return. This is the most common form of gold investment worldwide.

When Is The Best Time To Invest In Gold & Silver

Much like investing in stocks, its generally not possible to time purchases and sales of gold and silver with any precision. But as a general rule, the best time to buy any asset is when its either undervalued or in a prolonged holding pattern.

There doesnt seem to be much evidence that either gold or silver are currently undervalued. But the markets for both metals have been quiet for the past few years, particularly since gold hit an all-time peak price of $1,900+ in August 2011.

It has since eased back, but has been hovering around $1,500 during much of that time. With metals prices trading in a tight range in recent years, now seems to be as good a time as any to buy in.

While we seem to be in the late stages of the current economic and financial market upturns, storm clouds are certainly gathering on the horizon.

Since precious metals tend to react to instability, theres plenty to be found. Examples include:

• The ongoing turmoil surrounding the White House.
• Tensions between the US and Russia, China, North Korea, and Iran
• The rapidly rising federal budget deficit and cumulative national debt.
• Rising auto loan delinquencies, signaling consumer financial stability is weakening.
• The still unresolved student loan debt bubble.
• The explosion in healthcare costs, threatening to bankrupt millions of households as well as the nation at large.

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Advantages To Buy Gold Coins

Gold and other hard metals have always been a time-honored part of traditional investment plans. Heres why:

• Gold tends to go up when other investments decline, providing a stabilizing effect for your portfolio.
• Gold is a bulwark against inflation.
• You dont have to pay capital gains tax until you sell.
• Nobody has to know you have it if that matters to you.
• In worst-case financial scenarios, such as massive currency devaluation, you can use gold and silver to buy and sell. That may sound crazy but it has happened in other countries.

Investing In Gold And Silver Stocks And Funds

When we talk about gold stocks, we dont mean stocks of companies that own large amounts of gold. Instead, theyre stocks in companies engaged in the business of mining gold.

Put another way, investing in gold stocks isnt the same as investing in gold bullion itself. Youre investing in the companies that produce it, which makes gold stocks more like other stocks than bullion.

But that doesnt mean gold stocks are irrelevant if you want to invest in gold. Since gold-mining stocks are tied to the metal itself, they tend to rise when the metal increases in value, and decline when the metal falls.

In fact, during a significant increase in the value of gold, gold-mining stocks can rise in price at a faster rate than the metal. This is because gold-mining stocks represent a form of leverage on the metal itself.

As the price of gold rises, profits for the mining companies increase as well. That increase in profits can be higher on a percentage basis than the increase in the gold price.

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Silver Is Cheaper Than Gold

Silver is less costly than gold much. In the 21st century, its spot price in the financial market has never exceeded $50 an ounce. Gold trades in the four figures. So silver is much more affordable: The same dollar investment buys you a lot more silver than gold, and silver has the potential to offer more profit.

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How Do I Buy Gold And Silver

Some people will buy physical bullion or miner stocks to gain exposure. The problem with bullion is that the bid-ask spread is expensive, and storage can be a pain. The problem with miner stocks is that they are correlated more with equities than gold or silver, which limits their diversification value.

Your best choice is an exchange-traded fund . These funds hold physical gold or silver in a vault, and a share of the ETF represents partial ownership. You can buy and sell shares of the fund on an exchange like any other stock during regular trading hours.

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Final Thoughts On How To Buy Gold And Silver

Now that you understand the benefits of investing in gold and silver, as well as how to buy it, give serious thought to adding a small position in these metals to your portfolio. No, they wont provide the steady returns that interest-bearing assets and stocks do. But they have real potential to perform well when those other investments arent.

Just a small allocation–5% to 10%–could add a significant amount of protection to your portfolio if things get ugly in the financial markets.

Why The Perth Mint

To reflect the ever-changing price for precious metals, the prices displayed on The Perth Mint website update every five minutes when the global precious metals market is open.

Investors can buy, sell and store gold, silver and platinum with The Perth Mint Depository. There are also a variety of weights to suit all budgets. For example, gold can be purchased from 1 gram up to 1 kilo and silver can be bought from as little as 1/2 ounces through to 100 ounces. Here investors have an extensive network of secure facilities, including central bank grade vaults, to protect their precious metal holdings.

Whether buying for long-term investment, in preparation for uncertain times or as part of a diversified investment portfolio, The Perth Mints investment products combine the convenience of leading-edge investment solutions with an age-old trusted store of wealth. And thats not all. All precious metals are government guaranteed as were owned by the Government of Western Australia and bound by a statutory guarantee.

The Perth Mint Depository, established in 1994 at The Perth Mint, is one of the worlds safest locations for precious metal storage. It holds more than AUD 6 billion worth of gold, silver and platinum for more than 70,000 global clients and investors.

Our metals are ethically sourced and manufactured at The Perth Mint Refinery and we offer a range of storage options. Download our How to invest in precious metals guide for more information.

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Where To Buy Physical Gold As An Investment

For those that want to buy physical gold as an investment, they want to know where to go. You have a wide variety of options. Buying from the internet is a modern option that a lot of people choose to go for. When buying online, you want to make sure that you buy from a reputable company.

A better option than investing online is to find a local gold store. Most cities will have some form of gold or precious metal store. Sometimes these stores will be a part of jewelry store or a pawn shop.

Typically, the safest option to find a physical investment in gold is to go the US Mint. You can buy several different gold options directly from the US Mint. The mint tends to have a lower markup and is a reputable dealer. They wont try to scam you.

Before buying physical gold you should come up with a plan for storing it. At the very least you should invest in a home safe. This will help to reduce the chances of someone getting access to your gold. You will want to look for a quality safe that can be bolted to the wall and isnt easily countered.

Finding a safety deposit box is another option. If you decide that a safety deposit box is how you want to store your gold you will need to consider two factors: the monthly cost of the safety deposit box, and the trust you have in the bank. You want to pick a bank that you can trust.

A Guide To Investing In Gold And Silver

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At Alliance Gold and Silver Exchange, LLC, we buy gold and provide a wealth of options for precious metals investors. We can evaluate your collection of precious metals and provide you with a complete offer for the metals. Customers can review the offer and either accept it or refuse it. Those who accept our offers will get their money deposited in their accounts within a short time. Investors who want to learn more about selling their precious metals start by contacting Alliance now.

Investors and consumers invest in precious metals to get a safer and more secure choice for investing. The metals do not present the same risks as other investments, such as stocks. The owner has full control over their precious metals. By learning more about investing in precious metals, investors could avoid risky investments and generate more wealth. Investors or consumers review a variety of investment options to generate income. Traditional investments could include purchasing stocks or bonds, and some investors may even turn to real estate and other holdings to generate extra wealth. After accumulating wealth, investors want further options for investing and increase their investment portfolios. Precious metals could offer a better choice for investors.

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Investors Can Sell Their Precious Metals

Since the owner has full control, they can review the current values of their metals and decide if they want to sell right now or wait until another time. When selling their precious metals, the owner can show what metals and the amount they have to a buyer and get an offer for their metals.

This is a faster and efficient way to calculate the current price of gold and how much they can get for their collection. Some metals, such as gold, that have diamonds will be at a higher value depending on the quality of the diamonds.

Options For Gold Investment

Because gold is a physical asset, the way you choose to invest in it raises questions you probably don’t think about when buying financial assets like shares or bonds or picking a bank account.

None of these issues should stop you investing in gold. Thinking about them now will help you choose which option works best for you and your investment aims.

• What form do want your gold to take?

• Can you compare prices to get a good deal?

• Where’s the best place to keep your gold?

• How will you store it?

• Will you need to buy insurance?

• How easy will it be to sell the type of gold you’ve chosen?

• Will you need to pay any tax when you buy or sell gold?

To answer all these points, this guide explains the 3 simple questions to consider, because making good decisions today will make a big difference to your potential profits and protection from investing in gold.

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Filling Up Your Treasure Chest

Let’s take a look at the options available to those who want to invest in precious metals.

• Commodity Exchange-Traded Funds :Exchange-traded funds are a convenient and liquid means of purchasing and selling gold, silver, palladium, or platinum. Investing in ETFs, though, doesn’t give you access to the physical commodity, so you don’t have a claim on the metal in the fund. You will not get the actual delivery of a gold bar or silver coin.
• Common Stocks and Mutual Funds: Shares of precious metals miners are leveraged to price movements in the precious metals. Unless you’re aware of how mining stocks are valued, it may be wiser to stick to funds with managers with solid performance records.
• Futures and Options: The futures and options markets offer liquidity and leverage to investors who want to make big bets on metals. The greatest potential profits and losses can be had with derivative products.
• Bullion: Coins and bars are strictly for those who have a place to put them like a safe deposit box or safe. Certainly, for those who are expecting the worst, bullion is the only option, but for investors with a time horizon, bullion is illiquid and downright bothersome to hold.
• Certificates: Certificates offer investors all the benefits of physical gold ownership without the hassle of transportation and storage. That said, if you’re looking for insurance in a real disaster, certificates are just paper. Don’t expect anyone to take them in exchange for anything of value.

Central Bank Gold Sales

The price of gold remained relatively flat during the 80s much of the 90s. But in the late 90s, central banks began selling off reserves.

When they did, the price of gold plummeted to under $300 an ounce. Since central banks continue to hold close to 1 billion ounces of gold in reserve, future sales cant be ruled out.

However, it does need to be stated that in recent years the central banks of Russia, China, India, Turkey and other countries have been increasing their reserves.

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Gold Investments In The Form Of Gold Mining Stocks

A way to invest in a gold mine is to invest in mining stocks. You are basically backing the mining company and the prices of gold mining stocks follow the gold industry and the performance of the company. Gold mining has its risks though, remember its a dangerous business and this factors into the investment.

Should You Invest In Gold

If youâre concerned about inflation and other calamities, gold may offer you an investing safe haven. Though in the shorter term it can be just as volatile as stocks, over the very long term, gold has held its value remarkably well.

Depending on your own preference and aptitude for risk, you may choose to invest in physical gold, gold stocks, gold ETFs and mutual funds or speculative futures and options contracts. Regardless of the form of gold you choose, most advisors recommend you allocate no more than 10% of your portfolio to it.

Any form of investing carries risks. Gold is no different. But the idiosyncratic gold market isnât forgiving and takes a long time to learn. This makes gold ETFs and mutual funds the safest choice for most investors looking to add some of goldâs stability and sparkle to their portfolios.

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Ways To Invest In Gold

The following table shows the many ways you can invest in gold:

Here’s a closer look at these gold investment methods.

How Banks Lend And Sell Bullion

When a central bank lends gold to bullion banks for a specified period, say three months, it receives the cash equivalent of the gold lent to the bullion bank. The central bank lends this money on the market at a lease rate known as the Gold Forward Offered Rates , which is published daily by the LBMA. The higher the lease rate, the more incentive a central bank has to lend gold from its reserves. The bullion banks who borrow the gold can sell the gold or lend it to mining companies.

If the bullion bank sells the gold on the spot market, it will receive cash for the transaction. The spot market is where bullion and other commodities are traded at the prevailing market rate. An increase in the supply of gold in the market reduces its price. The bullion bank hopes that by the time its scheduled to repurchase the gold from the spot market, the price of bullion will be lower so that the bank can buy it back at a lower price than it had originally sold it. At the end of the loan period, the bank buys back the gold and returns it to the central bank.

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