Ever since their discovery, gold and silver have been a reflection of their owner’s wealth and have been recognized for their intrinsic value. People invest in precious metals for many reasons; they are not just a way to flaunt affluence or a means to pair aesthetics with luxury, but it is also a way to protect money from inflation. Investing in precious metals, especially during times of uncertainty, can help safeguard you from economic disasters. However, this type of investment, like any other, has its risks. When it comes to investing in precious metals, there are many aspects that you should consider. Here are 7 questions to ask yourself before buying precious metals.
1. Is It a Suitable Investment?
Before investing in precious metals, you must first think about whether it’s a good investment for you. While precious metals carry great intrinsic value and offer inflationary protection, they still have their risks. You should always keep in mind that precious metals prices are susceptible to drop in case of imbalances in the market. The prices can also significantly rise in times of economic uncertainty.
2. How Are You Planning To Invest?
If you are looking to invest in precious metals, you may be surprised to learn that there are several ways in which you can do that. You can either purchase physical bullion bars or coins or resort to gold exchange-traded funds. Each type of investment comes with its pros and cons. Investing through ETFs sounds like the more convenient option. While it is less complicated, you should always keep in consideration that when you invest in ETFs, you can’t claim ownership over your precious metals. You are also more susceptible to counterparty risks.
3. Gold or Silver Bullion?
If you want to purchase precious metals, you should decide on whether you want to buy gold bullion or silver bullion. Each type of bullion has its appealing features. However, value-wise, gold would be a superior investment. Jewelry demand and investments have made the gold market larger and more liquid; it is also less volatile than the silver market. On the other hand, silver is more linked to economic activity and can be especially attractive when the price of metals falls. If you are looking to make a small investment that falls on the cheaper side of the spectrum, silver bullions may be right for you.
4. Bullion Bars or Coins?
The next question that you should ask yourself should be whether you will invest in bullion bars or bullion coins. The specialists at SD Bullion explain that most investors find bullion coins to be a more suitable type of investment for them. This is because they are typically easier to trade and are more recognizable. Besides, bars sell at lower premiums than coins. Even if you decide to buy smaller bars, they could come with high transaction costs and may be hard to sell back. Only if you want to purchase precious metals in large quantities or are an institutional buyer, large bullion bars may be an appropriate option.
5. Which Coins Will You Be Buying?
There are several bullion coin options available for purchase. This is why you must research the best coins available in your area and settle on a type. Search for coins that are minted from high percentages of pure gold alloys and are sensibly liquid. You should avoid buying coins from countries that are less known as they are more expensive and resell at lower prices than other coins.
6. Where Will You Buy Them From?
Purchasing precious metals is not exactly the average physical type of purchase. This is why you must consider where you will be buying them from. Generally speaking, online dealers with buy-and-store programs with vaults that are approved from the non-bank London Bullion Market Association are your best options. You should never keep your precious metals outside their designated vault unless there’s an emergency.
7. When Will You Invest?
You must ask yourself when is a suitable time to invest in precious metals. If you plan to invest during times of economic uncertainty, you must make sure that you have extra money set aside. The price of precious metals may also rise during this time due to increased demand. This is why you must select the perfect opportunity.
Investing in precious metals has always had its advantages. Precious metals provide great value and are a significant indicator of affluence. Not only that, but they also help protect you and your wealth from inflation. However, there are several things to contemplate when purchasing precious metals.