How to invest in precious metals? 5 Things to Know

Investing in gold and silver is often considered to be a relatively safe option when compared to stocks and shares. But how to invest in precious metals as a starter?
We examine why they’re considered a safe investment and what you need to know before investing in gold and silver.

1. Gold and Silver Hold Their Value

It is essential to say that all investment involves risk. While precious metals are often considered a safe bet, they can fall and rise in value. But they’re generally a better bet for retaining value than equity-based investments.

Not only can they be generally relied upon to hold their price, and they are two of the most popular investments in the world.

This is because their value remains relatively unaffected by economic and political instability. And if there’s anything the markets hate the most, it’s instability.

Traders often rush to buy precious metals if things look shaky. Whether a currency loses its value or a government enters an unstable period – investing in gold and silver is seen as a safe haven.

Of course, gold and silver do go up and down in value over time, and you should be taking that into account. Their values can be affected by many things, which means that you need to see the big picture.

For example, if a lot of silver is mined one year, there may be more than enough to meet the demand – leaving a surplus in the hands of the mining companies. This would cause the price of silver on the market to drop.

Or, if not much silver is mined, scarcity will drive prices up. You can try and time your purchase to land when there’s a surplus, but no one can predict the future – it’s difficult to know when is best to buy.

For small investors who have little appetite for risk and cash which is earning nothing in the bank, precious metals could be the perfect investment.

2. What Type of Gold and Silver Should You Buy?

There are many different types of gold and silver to consider buying as an investment. Coins are struck by many different countries and come in lots of different designs too.

There are also bars available. The standard size is called a Good Delivery bar, which has a weight of 400oz. It also has many other specifications of quality which are set out by the London Bullion Market Association. This is an international standard.

The question of what you should buy isn’t straightforward.

Coins are convenient. They’re small and transportable, which might suit a small-scale investor. However, there are different types of coins. Some are weighed out to be a single ounce of gold and silver.

On the other side, there are numismatic coins – these are collector’s items. They do sometimes have a very high value if they are particularly rare imprints.

While the Good Delivery bar standards are used for trading purposes, in reality gold and silver bars come in various weights, from the very biggest in the world (a 250kg gold bar produced by the Mitsubishi Materials Corporation) right down to 1g.

3. It’s One of the Few Asset Classes That You Have Physical Control Over

Gold and Silver are unique in that you can own and move around with an asset class that is extremely liquid with an international benchmark price.

There are many physical investments, like property for example. But you cannot put a piece of property in your pocket and walk away. At the end of the day you own a piece of paper that states you own that property and trust the issuing government that the property stays yours.

Even with cash, people consider it as a physical asset class when they see their balance on their account statement. People don’t realise the difficulty they would experience from their bank if they were ever to try and take physical ownership of their money.

Diamonds are a similar asset class to Gold and Silver in that they are in your complete physical control but high buy/sell spreads and the lack of consistency in price make it less desirable as a store of wealth.

4. How Do I Go About Investing in Gold and Silver?

It’s as simple as buying your first coins – bingo, you’re investing in gold and silver.

We’re an authorized distributor and official partner of many countries’ mints, meaning you can pick up your very first coins right here.

If you decided you’d rather invest in bars – we’ve got those too.

Next, you need to think about where you’re going to store your investments.

5. Where Should I Keep Gold and Silver?

It goes without saying that if a thief can gain access to your gold and silver, you probably won’t see it again.

You need to think very carefully about how to store precious metals. You can store it yourself, which is perhaps the riskiest approach. If you lose it, it’s gone – no one will replace it for you!

Instead, why not consider keeping it in a safe deposit box? You can talk to a bank about this. However, most banks aren’t particularly interested in storing precious metals these days – they’re moved online.

Conversely, there are still services like ours which specialize in the expert storage of precious metals.

There are minimum amounts of gold or silver needed before any service will store your gold for you, but these are kept to a sensible minimum.

Talk to us today and find out how we’ll keep your precious metals securely stored, with full insurance coverage from Lloyd’s of London.