Now that the Olympics are over and all the medals have been handed out, it may time to consider gold and silver in a different light – as a part of your overall investment strategy. Even though people may know a lot about gold and silver as an accessory, they may not know how to enter the precious metals market. So let’s look at the basics of investing in gold and silver.
An investor can get into gold and silver in one of three ways:
1) they can purchase bullion and coins
2) they can purchase stocks, mutual funds and ETFs (exchange traded funds) of companies that own, or mine gold and silver,
3) they can purchase options and futures.
This last option involves a higher degree of risk and is best undertaken with the advice of a knowledgeable financial professional.
The spot price of precious metals is quoted in real time and is available to investors through a number of apps and websites, as well as live feeds on business channels. “Spot price” reflects the current value of an asset per ounce. If you are buying or selling gold and silver securities, spot price influences the unit price you pay. If you are buying physical gold and silver, you will pay a spread or premium over spot price. If you are selling, the spot price will be discounted by the spread.
A typical spread for buying gold is something close to $50 dollars over spot, and something close to $2 over spot for silver. However, you need to shop the spread because some dealers will be lower than others. In addition, there are some Internet dealers that have significantly lower spreads.
If you buy gold and silver securities through a financial advisor bear in mind that person is licensed and regulated by state and federal agencies. They are governed by standards of conduct that require that they act in your best interest. If you buy physical gold and silver from a dealer they are not licensed or regulated. Anyone can sell it. So do your due diligence and know who you are dealing with.
For people that have decided they want in on the gold and silver market, here are facts you may want to know – from September 2015 to September 2016 gold’s spot price fluctuated between $1050 to $1360 an ounce, while silver floated between $13.70 and $20.60. The historic high for gold is $1895 an ounce and silver peaked at close to $36.
Finally, if you are inclined to hold physical gold and silver, you will want to consider storage space. It should be adequate in size and secure. You don’t want a valued investment stored in a shoe box at the top of the closet.