If you have ever heard of someone who has invested in precious metals such as gold or silver you might have wondered why they would ever do that. This is not an uncommon inquiry, because all too many people are simply in the dark about the benefits of investing in and owning precious metals.
If you look back in history, people have been trading gold and silver for thousands of years. Not only have precious metals been valued for thousands of years, today they are one of the wisest, and safest investments a person can make. The two most popular forms of gold and silver around today are gold coins and gold bars. These types of bullion can be found in brick and mortar stores as well as the recently popular online dealer of precious metals. The purpose of this article is to explain the benefits of owning gold and silver as well as to differentiate between the various forms these metals are found in.
Coins vs. Bars
The two most popular and widely consumed types of gold and silver are bars and coins. While coins and bars can be of the same weight and purity level, you will notice that the values and prices can be vastly different.
Gold and silver bars are a great investment vehicle for any type of investor, big or small. These bars can be found in sizes that are anywhere from smaller than a postage stamp to as large as a brick. The amount you will pay for a gold or silver bar corresponds directly with how big your bar is as well as purity level. Purity level, simply put, is the amount of metal (gold or silver) present in the bar. No widely consumed bar is 100% silver or gold, but the norm in today’s market is that bullion is 99.9% pure. Basically, the bigger the bar is, the more you can expect to pay. Common sizes of both gold and silver bars are 1 gram, 10 gram, 1, ounce, 10 ounces, and 1 kilogram. They can be found all over the internet and in brick and mortar stores everywhere.
Gold and silver coins are completely different than bars for the sole fact that coinage is legal currency in nations around the world whereas bars are not. Coins are produced by government mints, unlike the private manufacturers who produce bars. The reason for gold and silver coins being different in value than bars is because government mints can manipulate the price and value of their coins much easier than bar producers can. There are so very few government mints throughout the world, and there is an almost countless number of people wanting the coins they can produce. This incredible demand for coins means that a given government can decrease production, thus jacking up the price (and their profits) and making gold and silver coins worth much more than the metal content of them. Bar producers exist all over the world, and if a given producer of bars were to cut off production, another company would fill its void. For this reason, you will often see a bar and a coin of similar weight and purity being worth vastly different prices.
Coins are minted in so many countries all over the world, which means collectors of coins abound and are popping up more and more all the time.
Storing Your Metal
If you are like any other investor, you want to safeguard your investment to the best of your ability. Since precious metals are physical items, safeguarding your investment begins to take on a whole new meaning. When you purchase precious metals, be them coins or bars, you have two options when it comes to storing and protecting your investment. Your first option is to simply store them somewhere in your house or another safe place you know. Since most of us will never be multi-million dollar gold investors with hundreds of bars to protect, keeping gold and silver in a safe place at home becomes an incredibly feasible idea. In most cases, someone who is serious about metals investing goes out and purchases a safe they can situate somewhere in their home. The safe serves no other purpose than to keep your bars under your protection.
Your other option is to keep your gold at what is called a depository. Depositories exist all over the US and the world and are no more than vault locations where your metals will be stored under the utmost protection. Like a tenant in an apartment, you will be subjected to monthly or annual fees which correlate with how much metal you have as well as the space available in the vault. Vaults simply give the investor the peace of mind of knowing their investment is under constant protection.
When to Buy
Because the value of gold and silver on the open market is in constant fluctuation, like stocks on the stock market, there is a strategy behind how you should buy and sell your precious metals. By looking at the recent trends of both gold and silver you will see when the price is rising and when it is falling. It is always smartest to buy precious metals when their value is falling or has fallen relative to its most recent run of values. For example, if gold were worth $1,400 one week, and then fell to $1,100 the next, this would become an opportune time to purchase the metal. It is always better to buy low and sell high. Selling high consists of exactly the opposite of what I just described. For example, if you hypothetically purchase a certain amount of gold for $1,100 an ounce, and two weeks later the price has risen to $2,000, this would be an opportune time to sell. Of course, this is an exaggerated example, but the point is all the same.
It is next to impossible to predict what the value of precious metals is going to do next, but by paying attention to world economic and political news, you will be able to gain a better understanding of when and how metals are going to react to certain events and situations.