With gold prices reaching their highest points ever in 2024 and silver prices surging alongside them, interest in investing in bullion is picking up. Many retail investors (individuals who are investing for their personal goals) are catching on to the fact that bullion is already part of many institutional investors’ portfolios, including central banks, governments, the International Monetary Fund, and investment funds.
They want to invest in bullion, too, accessing some of the asset’s unique traits, such as a lack of correlation with stock market performance and its ability to maintain value against inflation. As new investors become attracted to bullion, it’s important that they learn how they can buy bullion themselves and which way will best help them reach their financial goals.
There are two primary means of investing in bullion, with some subcategories that we’ll explore as well.
Physical Bullion
One of the more popular ways for retail investors to include the asset in their portfolio is by buying physical bullion. Gold and silver are the most common metals to include, although some investors also look for platinum and palladium. These metals are usually purchased in the form of bars or coins and can be acquired from bullion dealers such as Global Bullion Suppliers.
You can acquire bullion both online and in-person. You may be able to save on shipping and insurance costs if you acquire it in person, and you can verify the product yourself before it arrives.
Allocated Storage
Many individuals prefer to keep their bullion at home. They invest in a home safe and get insurance for their precious metal holdings. Other investors prefer to keep their bullion offsite, and the best solution for them is allocated storage. For a fee that covers rent and insurance, they pay a third party to keep their bullion in an allocated storage space.
Financial Instruments
Investors who do not want to worry about storage or insurance but are willing to pay other fees and management costs can look to a number of financial instruments to introduce bullion into their portfolios. These are some of the most popular financial instruments for bullion.
Gold Exchange-Traded Funds
Exchange-Traded Funds, or ETFs, are funds that hold a basket of investments. You buy shares in the fund, and the fund manages its assets to achieve a particular goal or fill a certain investment niche. Some ETFs attempt to replicate the performance of an index, while others follow the price of a commodity like gold. They’re traded on exchanges themselves and are easy to invest in online. Gold ETFs may invest in physical bullion, mining stocks, and futures.
Gold and Silver Mining Stocks
Investing in mining stocks can be a bit riskier than investing in the metal itself. Any time you invest in stocks, you are investing in that company’s performance and ability to turn a profit. When gold and silver prices rise, mining companies’ revenues typically rise as well, but costs depend on management, regulations, labour costs, fuel costs, and circumstances well beyond the price of the metal.
There are other financial instruments as well, such as futures, but these are the best tools for beginners.
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