Monday, February 18, 2013

How to best invest in gold and silver

Currently, I am very bullish on gold and silver for my growth portfolio.  

There are many ways to invest in gold and silver: some better than others.

- Physical bullion:  coins or bars and take physical delivery.  There are many bullion dealers advertising on the internet now days and they will mail you bullion as quickly as your payment clears.
     - Store under your mattress
     - Store in a safe deposit box
- Bullion in an allocated account.  Several companies provide precious metals storage and even trading services.  'Allocate' is the key word here.  It means that your bullion is specifically allocated to you and not mixed with that of others.  Serial numbers and separate storage areas 
are necessary.

- Bullion trusts or closed end funds.  A trust will state clearly that all the metals in the trust are stored separately and that it is unencumbered, meaning that no contracts (e.g. leases) have been written to potentially commit this bullion to another party.

- Shares of precious metals exchange traded funds (ETF). 

- Options on the price of gold, such as those offered by the CME/COMEX

- Shares of gold mining companies

- Shares of funds of gold mining companies

- Options on the shares of gold mining companies

Do your homework.  Make sure you know all the risks of your preferred investment vehicles.  You are probably investing in precious metals because you think there's an upcoming crisis.  Discovering the risks of your investment during the crisis is an expensive way to learn.  Don't look to see if you have flood insurance after the radar map shows a hurricane coming to your doorstep.  

I will discuss the advantages and disadvantages of these investment vehicles in future posts.  And welcome your comments and emails on the topic. 

1 comment:

  1. Like the breakdown on various ways to invest in precious metal. Looking forward to more posts.