Gold & Silver Investing

There’s lots on this blog about investing in Gold & Silver, but not much on how to invest, what types of investment are out there or where to buy your Gold & Silver; therefore I introduce: Your guide to Gold and Silver Investing.

You as the potential investor have 3 options in your approach to your investment:

• Physical Holding
• Certificates
• Paper Assets (ETF)

Physical Holding. And my preference as it is possibly the most reassuring.  You simply find a distributor for Gold & Silver and through a very normal standard commerce or e-commerce transaction, you buy your Gold & Silver or should I say exchange your ‘worthless currency’ for real money.

There are various outlets for these services, such as high-street dealers, but the most readily accessible are those on the Internet, however a word of caution; BE CAREFUL with what you purchase via the internet, make sure the company you buy your Gold & Silver from is reputable and legitimate.  I do not endorse any distributors other than ones I use, with my favorite being a U.S based firm called ISN or International Silver Network to give it its full title take a look at the link ISN .

They offer an excellent catalogue of products to choose from, including Numismatic graded Gold & Silver coins at various weights, to Bullion Gold & Silver again at various weights, oh and some great Gold & Silver based gift ideas!. The catalogue of coins and bars extend to Gold & Silver coins from GLOBAL State Mints, I can vouch for the quality the products are A+, especially as all of the Numismatic coins are graded and verified by the Numismatic Guarantee Corporation. Shipping costs are added to all orders, but how often do you get free P&P? but over all with the low cost Bullion and Numismatic coins it balances out. ISN also offer a very attractive customer referral package, which gives all customers the opportunity to earn money simply by referring a friend. 10/10.

Another firm I have used is Bullion by Post, they are U.K based and offer a similar catalogue to ISN without the option of purchasing Numismatic graded coins.  Personally, I think this is a little restrictive to your investment portfolio, as I think a good mix of graded coins and bullion gives an investor more flexibility.  They ship very quickly indeed, but their prices are slightly higher compared to ISN, so in order to get the very best prices you need to order over 1000 Oz! Yes that is a lot of money, considering with ISN it doesn’t matter if you order 1Oz or 1000Oz, the price per Oz is the same. Due to a restricted catalogue of products and the higher prices it’s a 7/10.

There are others distributors out there but I have had no experience of them therefore am not able to comment on their products or efficiency. The benefits of holding your own Gold & Silver is that its physically in your hands, there is no company or bank that can go bust or insolvent and you lose your investment.  In this current climate, of bank bailouts, customers being restricted to how much of their own currency they can have, physical Gold & Silver seems like a very attractive option to me.  The only drawback is you are responsible for the security of your investment; keeping it at home is probably not a good idea, so renting a safety deposit box would possibly be the most secure yet anonymous option.

Certificates.  Umm well you can probably gather that I’m not a fan given the strengths I cite above for holding physical.  Ok, essentially, you buy your Gold & Silver from a company and instead of sending you your physical investment; the company (for a fee of course) offers to hold your investment and sends you a nice Certificate (on nice paper).  Usually insured this may seem like an attractive option but be cautious, having never seen your investment how can you be sure it EXISTS?  If your investment doesn’t exist and the company becomes insolvent (goes bust) you will probably lose your investment.  Incidentally, Bullion by Post, do offer this service, but I have never used it.  You will find plenty of companies on the internet who will gladly take your currency and offer you a Certificate in exchange; so the only other question you may be asking now is how do I liquidate my investment should I need the cash?, You simply call the company and tell them you wish to sell or redeem some of your investment, they SHOULD then transfer your cash to your bank, along with a new Certificate, assuming you didn’t sell all of your investment. 

For me, there is an element of risk in ANY investment but in this in particular, I don’t see any real benefit in Certificates? 5/10.

Paper Assets.  Traders amongst you will be well conversant with Exchange Traded Funds. For non-traders out there you can’t just go out and purchase some ETF’s, you need a brokerage account that deals and trades ETF’s.  I do have such an account but for the benefits I stated in owning physical Gold & Silver I do not purchase Gold & Silver through this account. 

You will probably incur annual brokerage fees, and will certainly be charged for each purchase you make, this is very similar to stock trading.

Be mindful that you are not buying the physical Gold & Silver you are buying another paper asset.  I don’t want to go down a rabbit hole on the technicalities of trading and ETFs, other than to say this is very much a fast paced market place and if you don’t know what you are doing you may be stung, day-traders can make a lot of cash very quickly with small price moves, so if you prefer to make quick money you may wish to consider trading ETF’s as an alternative.

So a quick canter through some various options in investing in Gold & Silver do your research and choose well.

'Fortune sides with him who dares'

Virgil

A valuable addition to this post, this is a short youtube video which explains quite nicely the complexity of Gold & Silver price manipulation, but pertinently to these last few paragraphs of this post, an indication as to why paper assets are VERY risky! 
The video is only 7 mins long but if you want to skip to the relevant part then watch from 5 mins onwards.

Enjoy.