There’s enough talk of currency devaluation and potential market crashes to make the most stalwart among us think about investing in physical precious metals, even as a diversification.
Gold and silver are the most popular precious metals for investors; gold is much more expensive than silver, so if you can only afford silver at present, don’t worry, just go for it – it’s a start!
Before you start, though, take this very sage advice so you don’t fall prey to these rookie errors.
Going in blind
If you just pile in one day and buy everything you can afford, you could look at the prices of precious metals a week later and find that you bought at the height of the market and if you’d just waited, you could have bought a lot more with your funds. Watching the prices of metals for a while means you can avoid purchases when the prices are higher, then buy at the bottom of the market and watch your investment increase in value.
Not shopping around
You should always compare prices and find out more about the dealers you’re looking at. Some sellers are just out to make a quick buck and they’ll see your inexperience, which could make them sell to you at an artificially-inflated price. You’ve essentially thrown that extra money away, so spend some time getting a feel for market averages before you decide on the right dealer.
Buying scrap gold and silver
Just don’t do it! No-one wants to bother with tatty old jewelry at the best of times, let alone a financial crisis. Scrap gold and silver is not an investment unless you have your own smelter! In addition, your scrap gold and silver may have lower-than-ideal percentages of gold and silver in it!
Buying from an unverified online seller
If you go off the beaten track you increase the risk of buying fake products or coins and bars of low purity. Worse still, you could end up with entirely fake bars and coins or even nothing at all to show for your money. Make sure you only buy from well-established specialist bullion dealers – in person or online.
You don’t diversify enough
You should have larger and smaller bars and coins of at least two metals. Gold and silver are ideal, but if you can afford some platinum then buy it. You also need different sizes so that you’re not stuck trying to split a 1oz gold ingot in a time of emergency.
Not looking at the purity
You should buy as pure as you can – 99% or 99.9% – because bars and coins that are 90% pure don’t actually cost that much less and you may have difficulty shifting it when you need to. It’s better to spend $500 on silver that’s 99.9% pure than $450 on the same weight that’s only 90% pure.
Concentrating too much on metals
We still are using paper and electronic money, so don’t tie up all your funds in metals. We’re likely to be using paper money for ten or so years yet, so carry on paying your bills, grocery shopping and mortgage with your usual funds! Don’t overbuy on metals, you need some liquid assets for quite some time yet.