There are a lot of different ways to invest in gold and silver but below I list the 5 best ways and these are the options I use and recommend and that are available to the average investor.
I’ve listed these options starting with the lowest risk investment strategies, meaning a low possibility of these assets going to zero value, building my way up to the higher risk but potentially more profitable ones.
# 1 Personal Physical Ownership
Buying real, physical gold and silver coins, rounds, bars, ingots and other bullion and storing them in a safe place that you can easily access.
This is the most direct, simple, and one of the best ways to invest in gold and silver and every serious precious metals investor should have some of their assets in the physical stuff at all times.
Physical ownership is also the most secure way of investing as it will not go bankrupt and default on promises or obligations. During times of economic crisis, this is the best way of preserving wealth, avoiding financial hardship, and maintaining liquidity.
Owning physical gold and silver are not traditional investments but an alternative to fiat-paper money and the best way of storing and preserving wealth. For getting rich, you’ll need to buy precious metals-based investments such as mining stocks and ETF’s, which we’ll discuss later.
One aspect that I don’t like about owning physical gold and silver is that it is the most vulnerable to theft and frankly I don’t feel comfortable storing it at my home. That being said, I still encourage you to keep a small amount hidden at your home, office, or other secure location that you can access at all times for emergencies.
If the next financial meltdown is strong enough to knock society back into the dark ages for a while, you’ll be very happy you decided to keep physical gold and silver on hand as your paper assets will be worth nothing. Hopefully things don’t get this bad but it’s better to be prepared just in case.
There is a saying, “If you can’t hold it, you don’t own it” and that is why personal physical ownership is #1 on the list!
Make sure you buy a good safe, find a great secret hiding place, and whatever you do…don’t tell ANYONE!
Click here to see my latest list of the fastest, safest, most honest, and cheapest online dealers of physical gold and silver that I buy from all the time.
# 2 Stored Physical Ownership
Although I do keep a small amount that I can access anytime, stored physical ownership or secured vault storage outside the banking system is my preferred way of holding large quantities of gold and silver bullion.
If you’ve ever had to store thousands of dollars worth of precious metals hidden around your house then you know what I’m talking about. I would much rather pay a reasonable storage fee and have the piece of mind knowing my gold and silver assets are secure and safe from theft.
There a few reputable precious metals vault storage providers but the best in the business is Brinks Precious Metals Allocated Vault Storage.
For smaller investors, GoldSilver.com has a pretty good storage program with Brinks making it possible to have access to the benefits of secured vault storage without having to pay expensive storage fees.
Your gold and silver will be less accessible but you can sleep well at night knowing it’s completely secure, insured, safe from theft, and you can have it delivered to you any time you want.
BANK SAFETY DEPOSIT BOXES ARE NOT THE SAME: Your local bank safety deposit box may seem like a secure location to store your precious metals but its actually one of the most riskiest options.
In the event of a huge financial meltdown or severe social unrest, banks will be closed leaving your gold and silver trapped inside and not in your hands.
# 3 Digital Allocated Ownership
Digital ownership, or buying allocated physical gold and silver that is held in a liquid digital account, has become one of my favorite ways of investing for the average person.
This is by far the easiest and fastest way to buy physical gold and silver without having to worry about storage and other security measures associated with physical bullion.
This is also the most liquid form of owning physical gold and silver. You can buy and, more importantly, sell your valued amount in a matter of seconds on your smart phone or computer. This is quite a unique benefit as every other form of transacting in physical precious metals is a slow and sometimes a frustrating process.
Another great advantage is that the spread on the buying and selling prices are very close to the actual spot prices… unlike buying physical gold and silver traditionally where you buy at a premium quite a bit higher than spot price and sometimes forced to sell at a price lower than spot.
The biggest disadvantage or risk would be that you never actually see your physical gold and silver and you have to trust that the broker in fact does have the amounts you’ve purchased stored in their vaults. Transactions are also conducted digitally over online networks so I guess you run the risk of not having access to your money during a time of extreme crisis.
However if you ever get nervous and feel uneasy as to what you actually own, you can always redeem your account into physical gold or silver and have it sent to you, for a fee of course.
Other than that, this is a convenient, safe, fast, and modern way of investing in gold and silver which I’ll be doing much more of in the future.
Here are two allocated, much safer than unallocated, digital gold and silver providers that I recommend and that actually hold and insure the precious metals you buy and will redeem them anytime you’d like in their physical forms…
- GoldMoney.com (Which is now part of BitGold)
- OWNx.com (Used to be known as SilverSaver.com but as far as I can tell is the same great service).
# 4 Exchange Traded Funds (ETF’s) and # 5 Mining Stocks
I put ETF’s and Mining Stocks together because they are very similar forms of indirectly investing in the rise of gold and silver. Although there are some technical differences, the most common feature about these investment vehicles is that they provide the best opportunity to make a lot of money in the precious metals market and are the most tax friendly.
Gold and Silver ETF’s
These asset classes provide investors with exposure to gold and silver by tracking the price changes of the metals without having to own the physical assets themselves.
Some ETF’s track the price either through direct or indirect ownership and the least risky option is to buy the ETF’s that actually own the physical commodity like…
The downside is you don’t own any real gold and silver and there always exists the remote possibility of the fund’s value plummeting to zero but the upside is that this is a very liquid asset class that can easily be bought and sold.
Other ETF’s, like Market Vector’s Gold Miners ETF and Junior Gold Miners ETF, own the stocks of gold and silver mining companies which typically rise and fall along with precious metals prices. However these are riskier as they are subject to complications with certain mining companies like poor management, labor problems, debt, and other unforeseeable factors that significantly effect the stock prices.
This is the riskiest asset class of silver and gold investments but if done right, can be the most profitable one too.
Every other investment option I would consider a defensive play where the goal is to preserve wealth and purchasing power but investing directly in mining stocks is taking an aggressive position and really trying to make a lot of money and create wealth.
For example, at the time I’m writing this post gold and silver have been on a nice little bull run the last 7 months with gold going up 22% and silver a very attractive 39%. These are very good gains in a short period of time and it’s great to see my physical precious metals go up in value. However if you bought Newmont Mining Corp stocks 7 months ago, which I did, you would have benefited from a whopping 164% increase in value, which I have.
Not only did my Newmont Mining stocks increase in significant value, but I also got paid while holding them through regular quarterly dividend payments. Pretty nice!
Because of the high risk factor, I don’t recommend allocating all your money to mining stocks but it would be a shame not to play this highly leveraged option and lose out on some big capital gains over the next few years. Plus, it’s a lot of fun buying different stocks, following the markets, and watching your investment account grow.
Another very important advantage, which I never hear precious metals investors address, is that mining stock investments are more tax friendly. One major issue with investing in physical gold and silver is that the IRS classifies these assets as collectibles, which is completely insane and a blatant attempt of our government discouraging people from competing with the Dollar and preserving their wealth but that discussion is for another time.
Anyway, when selling collectibles, you are taxed at a shocking 28% of any gains you make as compared to a reasonable 15% tax off any gains made with mining stocks. So this factor alone is the reason I have changed my investment strategy and focus on identifying and buying solid mining stocks in future.
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