What are the Best Tips for Buying Precious Metals?

Jeany Miller
Jeany Miller
Stack of gold bars.
Stack of gold bars.

Buying precious metals has become an increasingly popular investment. People who wish to secure their retirement or simply increase wealth have begun to look toward precious metals and away from traditional stocks and bonds. Before taking such a step, however, investors need knowledge of such terms as bullion and numismatic as well as information on ways to invest in precious metals. Gold bars and coins are popular investments where more weight purchased means less money spent. Although less popular, silver bars and coins offer additional options, but buyers should conduct business only with established dealers and understand the metals market as a whole.

Many consider precious metals investments to be financially sound, whether for securing retirement or increasing wealth. They often protect the buyer from financial pitfalls like inflation, and the metal can generally be sold to numerous dealers. In addition, precious metals may remain stable during national and international economic struggles. Thus, this investment may provide a greater return than that available from stocks and bonds.

When buying precious metals, gold is a first choice for many investors. Its international price has risen steadily since January 2000 with few significant dips. Moreover, the price of gold is largely driven by demand, which continues to see growth while production has leveled. This metal may thus help an investor diversify his or her investment portfolio without adding risk.

Purchasing gold for investment is often referred to as buying gold bullion. This term may collectively include both bars and coins, but it usually refers to bars. Before deciding to purchase gold, it is often necessary to study current prices and previous trends. Such information can likely help to determine what size and weight should be purchased. A general rule concerning gold is this: the more weight purchased means less money spent per premium ounce.

Gold coins often rely on weight, or gold content, for their value. In this manner, they are similar to many other precious metal coins. When considering an investment in gold coins, people should be aware of the differences between bullion and numismatic. Coins of the former variety are often created for investment purposes, whereas those of the latter sort are essentially for collections. The selling price of bullion gold coins often reflects the value of gold, but numismatic gold coins may be priced according to rarity, popularity, or quality.

In some countries, gold bars are sold by major banks, although specific areas require licensed dealers to handle such transactions. Gold bars can often be purchased in a variety of weights and sizes. In addition to physical purchases, people may also have the option of investing in gold certificates or accounts. These are often issued by banks and allow investors to hold gold without actual delivery or maintenance.

Silver offers another option when buying precious metals and is often available in bars and coins. Coins, which may include the pre-1965 U.S. coin or the Canadian Half Dollar, are likely to be more popular investments than silver bars. Bars, however, are often cleaner than circulated coins, which may be perceived as a benefit with some investors.

In addition to silver bars and coins, a person may also be able to invest in silver mining companies and silver futures. With a mining company, an investor is likely to pay such fees as those related to energy costs. Silver futures, which work like those of gold, often require the investor to sign a contract indicating when he or she will buy or sell. A safer investment may therefore lie with silver bullion, or bars, and coins. Some people believe that investing in silver may provide a better long-term investment than that of gold. This is because silver outperformed gold internationally throughout 2010.

With gold, investors often need to watch the market for important trends and prices. Speaking with an experienced precious metals investor may also offer insight to when and how silver should be purchased. First-time investors should also be wary of information they receive until it is validated by an expert in the field.

An often-followed rule when buying all precious metals is to look for established and accredited dealers. This can likely mean the difference between purchasing an authentic or fraudulent item. Investors should also understand that the value of precious metals often increases only when the price per ounce increases. Such an increase may not occur quickly; thus, the act of buying precious metals may require some degree of patience.

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    • Stack of gold bars.
      Stack of gold bars.