How To Buy Gold And Silver: 5 Easy Steps
How To Buy Gold And Silver: 5 Easy Steps
Master the precious metals buying process with our comprehensive step-by-step guide for smart investors
Introduction
Getting familiar with the buying process is a wise choice before you invest in precious metals. Having a plan will smooth out the process tremendously and help you make informed decisions whether you're looking to buy gold or purchase silver for your portfolio.
Some of what you'll learn will be specific to the precious metals industry: the best ways to buy, what products to choose from, how to weigh your options for storage. Other parts of the process are merely best practices and key takeaways for any investment strategy: like managing a budget or judging your exposure to risk.
Whether you're tracking current gold prices or monitoring silver market movements, understanding these fundamentals will help you navigate the precious metals market with confidence.
Table of Contents
Decide What Your Goals Are
Setting goals for your precious metals investments at the outset will make the entire process much simpler. In fact, it will determine what types of products you buy. This is important to know before you start buying.
Long-Term Investment Goals
Is your goal to establish a "nest egg," or long-term investment? If you plan on holding your gold and silver for the long run, bullion is your best choice. This includes bullion coins, bullion bars, and rounds.
Bullion Products
- Made specifically for investing purposes
- Eligible for precious metal IRAs
- High purity of 99.9% pure or better
- Lowest premiums per ounce
Popular Bullion Coins
- American Eagle (gold and silver versions)
- Canadian Maple Leaf
- South African Krugerrand
- Austrian Philharmonic
You will also find popular gold bars and rounds from trusted brands like the Royal Canadian Mint and PAMP Suisse. If you have very deep pockets, the most trusted bulk form of gold is the 400 oz "Good Delivery" bar recognized by the London Bullion Market Association (LBMA).
Buying Collectible Coins
Perhaps you're more drawn to collecting gold and silver coins as a hobby. That means you'll mainly be buying some combination of the following:
- Rare gold and silver coins
- Limited edition or limited mintage coins
- Vintage or antique gold and silver coins
- Numismatic gold and silver coins
Important Distinction
If you see descriptors like "antique" or "numismatic," then you're dealing with collectible coins. These are great for hobbyists but are much more expensive than buying bullion. The collectible market offers greater risk but potentially greater reward, while bullion products track more closely with precious metals spot prices.
Paper Gold Options
Maybe your goal is simply to generate income by trading precious metals. In this case, your most logical options are various forms of "paper gold," such as:
- Gold futures contracts
- Gold ETFs (exchange-traded funds)
- Gold-backed derivatives
- Shares of gold mining companies
- Mutual funds that invest in any of the above
The advantage of paper gold products is convenience - you can buy and sell with ease. However, the main drawbacks are trading fees and the fact that you don't take possession of any physical metal, which introduces counterparty risk.
Make a Budget (and Stick With It)
Budgeting is one of those boring but necessary steps in any financial endeavor. Your precious metal purchases are no different.
Which metals are you most interested in buying? Your choices, from most expensive to least expensive, are:
| Metal | Typical Uses | Investment Characteristics |
|---|---|---|
| Palladium | Auto industry, jewelry | Most expensive, high volatility |
| Gold | Investment, jewelry, electronics | Traditional safe haven, stable demand |
| Platinum | Auto industry, jewelry | Industrial demand, less common as bullion |
| Silver | Investment, industrial, jewelry | Most popular for beginners, affordable entry |
| Copper | Industrial applications | Semi-precious, industrial demand driver |
Dollar Cost Averaging Strategy
One key tip for budgeting is to regularly schedule your purchases and spread them over time. This strategy, known as dollar cost averaging, will lower the volatility of your metal costs since gold prices and silver prices fluctuate constantly. This approach is more effective than trying to perfectly time your orders.
Of course, if you see the price of a particular metal has been falling, "buying the dips" is also a proven investment strategy. Monitor market trends and take advantage of temporary price weaknesses when they align with your investment timeline.
Find a Reputable Seller
There's no better place to buy your metals from than a professional bullion dealer. They will always be your most reliable and trustworthy option for both gold purchases and silver investments.
That begs the question: How do you identify a trustworthy gold dealer? Here are some key evaluation criteria:
Customer Reviews
Read testimonials and reviews from past clients. What have customers said about their experience with this seller? Look for consistent patterns in feedback.
Product Selection
Make sure the seller has the type of products you're looking for. A quality dealer should offer a wide range of bullion products from reputable mints.
Clear Policies
You want to work with a company that clearly states its policies for returns, cancelled orders, shipping, and insurance coverage.
Transparent Pricing
Reputable dealers will clearly show their premiums above spot price and update pricing frequently to reflect current market conditions.
Comparison Shopping Benefits
It's useful to comparison shop between several dealers. This will give you a sense of which sellers offer the best prices and the widest selection. Whether you're shopping at your local coin shop or buying online, comparing prices is the best way to understand the current market.
Choose a Payment Method
This step may seem self-evident, but the importance of how you pay for gold or silver shouldn't be overlooked. Although your options will depend on the seller, ideally they should offer multiple payment methods.
Payment Method Warning
Be wary if a seller only accepts one type of payment, or doesn't accept orders online 24 hours a day. Reputable dealers typically offer flexibility in payment options.
Most precious metals dealers will accept these traditional payment methods:
- Credit cards - Convenient but may include processing fees
- Personal checks - Traditional option with clearing time
- Cash - For in-person purchases
- Bank wire transfers - Often the best value for large purchases
- Cryptocurrency - Some dealers accept Bitcoin and other digital currencies
Best Value Payment
Paying by bank wire is often your best value if this option is available. Wire transfers are fast, secure, and avoid certain fees, making them especially useful for large purchases where you want to minimize transaction costs.
Pick a Storage Option
Once you have finalized your purchase, choosing a storage option for your precious metals is a crucial consideration that affects both security and liquidity.
Safety Deposit Box
- Bank-level security
- Relatively affordable
Drawback: Contents are not insured, making this less than ideal for precious metal assets.
Home Storage
- Immediate access
- No ongoing fees
- Complete control
Drawback: You take on all liability for theft, and metals stored at home cannot be included in a self-directed IRA.
Professional Vault Storage
- Fully insured protection
- Segregated storage options
- IRA-eligible
- Flexible access for selling
Cost: Usually about 0.5% of total value annually.
Professional Vault Advantages
Keeping your metals in a vault (sometimes called a depository) is the most secure way to store them. You get the peace of mind that your metals are protected, fully insured, and kept offsite. Storing your metals offsite also gives you the flexibility to sell your precious metals or withdraw them whenever you like.
Generally, you can have your gold and silver shipped to your address or schedule to pick them up in person when using professional storage services.
Start Your Precious Metals Journey
Now you are equipped with the valuable know-how you will need to start investing in precious metals. Following these five steps will help ensure you make informed decisions whether you're looking to purchase gold or add silver to your portfolio.
Key Takeaways
- Define your investment goals before selecting products
- Use dollar cost averaging to reduce timing risk
- Research dealers thoroughly and compare pricing
- Choose payment methods that minimize fees
- Select storage options that match your security needs
- Monitor gold and silver prices to time your purchases effectively
Remember, successful precious metals investing requires patience, research, and a clear understanding of your financial goals. Whether you're preserving wealth, diversifying your portfolio, or hedging against economic uncertainty, these fundamentals will serve you well in your precious metals journey.