Beginner’s Guide to Precious Metals

Beginner's Guide
Introduction to precious metals

No matter why someone chooses to buy precious metals, whether as an investment or as a hobby, there are certain basics that they should become familiar with. These basic ideas will help them make sound decisions regarding their purchases. Without knowledge of these principles, a novice buyer make a mistake and not realize until it’s far too late. This guide is intended to help you understand the ins and outs of getting started with precious metals.

Precious metals have long been used for monetary purposes in the form of coins. They were spent as legal tender for virtually any kind of payment. It is only recently (in the past three decades or so) that gold and silver have been used purely as investment products. While they no longer have a role as legal tender currency, gold and silver still serve as important reserve assets for national governments and large banks.

There are many different forms that precious metals are fashioned into, the most common of which is jewelry. However, because it usually must be fabricated into intricate shapes and designs, jewelry is alloyed with other harder metals and rarely meets the investment-grade levels of purity found in bullion products--items made of highly pure precious metals. Although they take an array of forms in various cultures around the world, precious metals for private investment typically come in one of three forms: coins, whether old or new; bars, like the ones stacked up in vaults; and rounds, which are medallions with no legal tender value.

The amount of information about investing in bullion that can be found in the media and on the internet can be suffocating. This guide should help simplify these concepts so you can gain enough of an understanding about bullion purchases to make informed decisions yourself.

Key Terms

  • Bullion: a highly pure form of gold, silver, or platinum that is used as a commodity or investment product
  • Coins: monetary units that are issued by a governing authority for the settlement of debts or the transfer of value
  • Investment-grade: describes a bullion product of very high purity (usually, .995+)
  • Legal tender: currency; redeemable for commercial transactions and satisfying debts
  • Precious metals: metals that are considered highly rare and valuable (i.e. gold, silver, platinum)
  • Rounds: circular pieces of gold or silver bullion that are not a legal tender coins; sometimes, medals
  • View Other Terms