Is Physical Gold and Silver a Good Investment?
Precious metals are tangible assets that can easily be transported, making them an excellent way to diversify your portfolio and save you time on transportation costs.
As coins offer the easiest and safest means of investing in physical gold and silver, they represent the safest choice when investing. Bullion bars may be harder to sell at market value and often come with higher premiums.
1. They are a form of investment
Physical gold and silver offer many people an economic safe haven. Their prices don’t relate to stocks or bonds and have low long-term volatility, not being affected by inflation and maintaining global purchasing power in an economic crisis.
Physical bullion investments can be costly and complex, depending on where it is stored, its security, and whether you pay regular storage fees. Before making your decision on an investment form of physical precious metals to purchase, it’s wise to familiarise yourself with all available choices before making a final decision.
Investors may also choose mining stocks and funds, which allow them to profit from any price increases in gold and silver without needing storage or handling services. However, investors should keep in mind that mining investments may also be affected by other factors, including market volatility and political unrest. Furthermore, it’s wise to avoid high-pressure sales tactics from sales professionals as well as double check their background using FINRA BrokerCheck or general Internet research before investing with anyone.
2. They are a store of value
Gold and silver provide an ideal way to protect yourself against economic uncertainty while diversifying your portfolio – unlike stocks or bonds which can fluctuate, precious metals have no direct ties to global economic conditions and will retain their value even as other assets decline.
Though precious metals offer an economic hedge, it is important to take the costs associated with owning and storing them into account. Manufacturing markups drive up their price; storage fees and insurance could reduce returns further still.
Though precious metals investing isn’t usually done to generate returns, historically speaking it has delivered less than Nifty – a stock market index – as physical gold and silver returns may be taxed accordingly. If you are seeking higher income investments, perhaps other alternatives such as ETFs may provide better liquidity with reduced premiums may offer more potential for success.
3. They are a form of insurance
Many investors use precious metals as a form of insurance against financial crises, with physical gold and silver providing particular advantage in that there’s no counterparty risk — you own the metal itself instead of someone else’s paper contract.
On the downside, precious metal investments aren’t very liquid: You can’t use it to purchase groceries or cars (though in an economic collapse you might barter for some of it). Furthermore, purchasing and storing physical metal can be costly: Between account opening fees, dealers’ markups on melt value, storage costs and insurance fees as well as ongoing management fees, precious metal investments often start off at a loss.
But, even with their drawbacks, many still view precious metals as part of any investment portfolio. If you prefer more liquid investment vehicles for gold and silver investments such as SPDR or GDX exchange-traded funds may provide you with access to physical gold without having to store it, though fees will apply as with any investment product.
4. They are a form of currency
As precious metals historically hold their value over time and serve as an effective hedge against stock market fluctuations, billionaire investor Ray Dalio recommends allocating 5-10% of your portfolio towards precious metals.
Physical gold and silver investment involves purchasing bullion bars or coins through dealers, with markups and shipping costs adding further costs. Furthermore, large collections require secure storage due to markups. Furthermore, when selling the bullion you must also consider taxes, fees, and storage expenses when selling it back out again.
An increasingly popular way of investing in gold and silver is via stablecoins backed by real assets, like Kinesis – a metal-backed cryptocurrency offering a stable price without the inherent volatility associated with fiat currencies like USD or EUR. Stablecoins provide liquidity that cannot be obtained when selling stocks or IRA holdings; oftentimes this process is faster and less costly.