For many investors, rock beats paper. Gold and silver investments maintain their value more than printed currency and are a great way to diversify your portfolio. Some investors expand their exposure to these precious metals by purchasing jewelry, gold bars or via an exchange-traded fund. Although alchemy is somewhat outdated, here are a few ways to make money out of precious metal:
JewelryJewelry accounts for at least two-thirds of the world’s annual gold demand. Right now, China and the U.S. are the two largest markets for jewelry, and this growing international interest seems to indicate that people like shiny investments.
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Bars and bullionThis is the most common way to invest in gold and silver. Typically, gold bars return a greater profit than bullion because they carry lower premiums than gold coins. In many countries, these bars can be bought over the counter at major banks. However, bars have a higher risk of forgery than bullion coins. To take precaution against this fraud, consider buying bars approved and distributed by the London Bullion Market Association.
Exchange-traded funds (ETFs)You can invest in commodity ETFs that track the performance of these two metals. These ETFs are much like mutual funds but are traded on the stock market. Commodity ETFs, such as those focused on gold and silver, are passively managed. This means that you invest, sit back and watch it grow.
CertificatesThis is a less backbreaking way of investing in gold because certificates allow investors to trade securities without actually having to transport the metal. When investing in certificates, make sure to distinguish between allocated or unallocated gold. Allocated means there is a physical piece of gold that corresponds solely to that certificate. Allocated gold certificates should come with a number correlating to an actual bar of gold. Unallocated means that the gold is not necessarily in the bank’s vaults.
AccountsSome banks offer accounts in gold or silver, in which the precious metals can be purchased and sold like other foreign currencies. Gold and silver accounts work much like certificates in distinguishing between allocated and unallocated. Investors can buy gold and silver purchases without having to physically transfer the metals. Swiss bank accounts are one outlet for an allocated gold investment account.
Mining companies Go right to the source by investing in gold and silver mining companies. Granted, these shares are not in the form of gold, and the success of your investment is contingent on the quality of the company — not the price of gold and silver alone. However, shares in these companies can mean investing in a wide variety of metals such as lead, zinc or copper. As any financial expert will tell you, diversity is key.