How to Invest in Precious Metals (5 Best Ways)

investing in precious metals

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Are you looking for a safe investment while dealing with economic uncertainty? Many consider precious metals, such as gold and silver, safe investments. Gold prices tend to go up when the stock market is down, making the rate of return a potential hedge against inflation and economic downturns.

The value of the precious metals market was $182 billion in 2019 and is anticipated to grow at 9.0% by 2027. A wide range of options is available to the average investor wondering how to invest in precious metals.

The first method is to buy coins or silver and gold bars from a dealer. This method is the most direct investment, but comes with certain risks.

A precious metals IRA is another option for indirect investment. You can open this retirement account and invest in gold or silver, just as you would with stocks.

Another option to invest in precious metals is with the stocks of gold mining companies. This method is a more indirect investment, but can be less risky than buying physical metals.

ETFs or exchange-traded funds are another investment option. ETFs are a fund that trades on stock exchanges, offering investors a way to invest in a bundle of assets without purchasing each asset individually.

The fifth way to invest in precious metals is through mutual funds. Mutual funds are another type of investment fund, and like ETFs, they offer investors a way to invest in multiple assets without buying each asset individually.

No matter which way you choose to invest in precious metals, it is essential to do your research and understand the risks involved. Precious metals are a volatile investment, and they can go up or down in value at any time.

5 Best Ways to Invest in Precious Metals

  1. Precious Metals IRA
  2. Precious Metals ETF’s
  3. Precious Metal Mutual Funds
  4. Silver & Gold Coins/Bullion
  5. Gold Stocks

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1. Precious Metals IRA

A precious metals IRA is an individual retirement account in which you can invest in gold, silver, platinum, and palladium instead of more traditional investments like stocks and bonds.

The two types of IRAs are traditional and Roth. With a traditional IRA, you make contributions with pretax dollars and pay taxes on the money when you withdraw it in retirement. Roth IRAs work oppositely: You contribute with after-tax dollars, but your withdrawals are tax-free in retirement.

You can hold precious metals in both traditional and Roth IRAs. However, there are some rules and regulations of which to be aware.

For example, the Internal Revenue Service (IRS) only allows certain types of gold, silver, platinum, and palladium bullion in an IRA. You must also store the metals in an IRS-approved depository.

Additionally, there are limits on how much you can contribute to an IRA each year. For 2020, the contribution limit for traditional and Roth IRAs is $6,000 ($7,000 if you are 50 or older).

If you have a 401(k) through your employer, you may also be able to roll it over into a precious metals IRA.

Here are my recommendations for gold ira companies:

2. Precious Metals ETFs

Precious metals ETFs are exchange-traded funds that invest in gold, silver, platinum, and palladium.

Precious metals ETFs offer investors a convenient and easy way to gain experience with the precious metals market without needing to take physical possession of the metals. 

ETFs are also simple to purchase and sell and can reside in a regular brokerage. ETFs are a novel way to invest in precious metals. However, they are subject to market risk and can lose value.

Be sure to research an ETF before investing, and always consult with a financial advisor to ensure an investment is suitable for you.

Here are my recommendations for ETFs:

  • iShares MSCI Global Silver& Mtls Mnrs ETF (SLVP)
  • iShares MSCI Global Gold Miners ETF (RING)
  • VanEck Junior Gold Miners ETF (GDXJ)
  • Global X Silver Miners ETF (SIL)
  • US Global GO GOLD and Prec Mtl Mnrs ETF (GOAU)

3. Precious Metal Mutual Funds

Precious metal mutual funds are mutual funds that invest in companies involved in the mining, processing, and production of gold, silver, platinum, and palladium.

Precious metal mutual funds offer investors diversification and professional management. They are a good choice for many investors because they provide exposure to the precious metals market without the need to take physical possession of the metals.

Mutual funds are low-risk investments, but they can lose value.

Here are my recommendations for mutual funds:

  • Invesco Gold & Special Minerals Fund (OPGSX)
  • US Global Investors Gold & Prec Mtls Fund (USERX)
  • American Century Global Gold Fund (BGEIX)
  • USAA Precious Metals and Minerals Fund (USAGX)
  • VanEck International Investors Gold Fund (INIVX)

4. Gold & Silver Coins/Bullion

Gold and silver coins/bullion are a tangible asset class you can hold in your hand and take physical possession of if you choose.

There are various ways to invest in gold and silver coins/bullion, and the best way for you will depend on your circumstances and investment goals.

You can buy gold and silver coins/bullion from various sources, including coin dealers, online retailers, and precious metals exchanges. Make sure to compare the market price before you purchase anything.

You can also store your physical metals in a safe deposit box or at home.

Here are my recommendations for gold and silver coins:

5. Gold Stocks

Gold stocks are good for investment purposes because they expose gold mining companies. They can be more volatile than other types of assets but can also provide high returns in a short period.

Gold stocks are typically traded on major exchanges and can be bought and sold through brokerages. Be sure to compare fees and commissions before you make a purchase.

Here are my recommendations for gold stocks:

  • Barrick Gold (GOLD)
  • Franco-Nevada (FNV)
  • OceanaGold Corp. (OCANF)
  • Lundin Gold Inc. (LUG.TO)
  • Yamana Gold Inc. (AUY)

Should I Invest in Precious Metals?

Precious metals offer investors a way to diversify their portfolios and protect against inflation. There are multiple ways to invest in precious metals, and the best way for you will depend on your circumstances and investment objective.

When investing in precious metals, it is essential to do your research and choose a reputable dealer. Be sure to understand the fees and commissions involved, and always keep safety in mind when storing or transporting your metals.

 If you’re looking to invest in precious metals, I recommend researching and starting with one of the options above. Gold and silver coins/bullion are a good start, and gold stocks offer opportunities to invest in fast-growing companies.

Final Thoughts

Investing in precious metals is a fantastic option to protect your portfolio against an economic crisis. Gold, silver, platinum, and palladium are all valuable metals that can diversify your investment portfolio and provide an exciting way to grow your assets.

There are many ways to put money into precious metals, so find the investment strategy that best suits your needs. Inflation, economic recession, and market volatility are only a few of the reasons to invest in precious metals.

Give some thought to how these types of potentially profitable investments can help you reach your financial goals.

FAQ’s

Here are some frequently asked questions about investing in precious metals.

The best way to buy precious metals will depend on your circumstances and investment goals. Some investors take physical possession of the metals, while others prefer to invest in gold stocks or mutual funds.

The best precious metal to invest in will depend on your investment goals. If you are looking for stability, gold may be a good choice.

Silver may be a better choice if looking for potentially high returns. The price of silver fluctuates because silver’s value is calculated based on its function as a store of value and its industrial demand.

Platinum is rarer than gold or silver, and its price is more volatile. Palladium is also a rare metal, but its price aligns more closely with the price of gold. The automotive industry has a large platinum demand (especially for the catalytic converter), so prices often link to vehicle sales.

Manufacturing industries require palladium, particularly in electronic devices and solar panels. It is harder than platinum, making it a better choice for many industrial applications. Palladium is less expensive and more stable than platinum.

The best investment method will vary depending on your circumstances and investment goals. You can take physical possession of the metals, invest in mutual funds or ETFs holding rare metal stocks, or trade rare futures contracts.

Futures and options are more speculative investments and unsuitable for certain investors. Be sure to understand the risks before you make a trade. 

If you possess rare metals, be sure to store them in a safe and secure location. You can also invest in businesses that mine rare metals. These companies typically trade on major exchanges.

Precious metals are a bad investment because they are volatile and can lose value quickly. They are also subject to fraud and theft, and there is no guarantee that you will be able to sell your metals when you want to.

Always research and consult a financial advisor before investing in any asset.

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When it comes to customer service, fees, safety, and overall customer satisfaction, Birch Gold Group checks all of the boxes.