In today’s fast-paced, inflationary world, many people are interested in investing in silver or gold, but are unsure of how to begin the investment procedure. Fortunately, the process of investing in these precious metals doesn’t need to be overly complicated.
For hundreds of years, people around the world have invested in gold and silver because it’s a consistently valuable commodity. Not only are they a hedge against inflation, but gold and silver provide financial protection against currency deflation, political and social unrest, stock market declines and economic instability.
While investing in gold has always been regarded as a wise decision, an increasing number of people are choosing to put their money into the silver market these days.
Physical Gold and Silver
Whether it be gold and silver coins or gold and silver bars, owning physical precious metals is one way you can invest. While owning physical silver or gold may elicit a sense of financial security, the items should really be stored in depositories, or secure places such as safe-deposit boxes, safes or vaults.
One way you can invest in gold and silver is to visit pawn shops and jewelers that sell precious metals. Although not every pawn shop does so, it’s not uncommon to find gold and silver coins, bullion and bars for sale at these establishments.
Physical gold and silver can sometimes be purchased from brokerages, and there are lots of precious metals dealers who regularly sell the metals in physical form.
A great way to begin investing in silver is to purchase some silver coins at a coin store or pawn shop. American dimes, quarters and half-dollars made before 1965 are made of 90 percent silver, and are widely considered a good investment.
Paper Gold, including ETFs
For many people, the easiest and most convenient way to invest in gold and silver is to obtain ETFs or other forms of paper gold. Exchange-traded funds (ETFs) can be obtained through brokerage accounts, and they generally maintain high levels of liquidity.
ETF’s are traded on exchanges similar to the stock exchange, and throughout an average day, an ETF’s share price may change several times. Some investors find that downturns in the stock market can be offset by holding commodity ETFs.
It can be more cost-effective to invest in commodity ETFs, such as gold or silver, than to hold physical precious metals. They can provide a hedge against economic instability, and do not require insurance.
An increasing number of people are now investing in gold and silver through the use of ETFs. Their overall low cost, tax efficiency and flexibility make them very attractive to investors. Additionally, the relative simplicity and ease of the process means you don’t have to learn all sorts of complicated futures information.
Another option for people who want to invest in gold and silver is to put their money into gold futures. The futures are contracts wherein the buyer agrees to take possession of a certain amount of gold or silver at an agreed-upon price, at a specified future date.
The New York Mercantile Exchange (NYMEX) is where the trading of gold futures takes place. Most of the COMEX transactions there pertain to either 10, 50 or 100 troy ounce contracts.
When the future price for a commodity future is higher than the current price, the commodity future is in a state of contango. If the future price for a commodity future is lower than the current price, then the commodity future is in a state of backwardation.
All over the world, there are people of all ages who want to learn how to invest in gold and silver. Hopefully, the methods described here will help you to better understand the commodity investment process.