The 1930s great depression and other global economic crises have continued to push for diversification of investment.
There are many areas you can invest such as stock, government bonds, etc. But when it comes to assets that are efficient in hedging against inflation, you have to consider precious metals like gold and silver.
In this piece, you will be getting critical information regarding how to buy gold and silver. Read along.
ETFs (Electronic Traded Funds)
This method allows you to purchase gold and silver in a liquid form. Once you make payment for your purchase, you don’t have them in your possession. They are stored in your electronic wallets online.
This system’s beauty is that you can buy and sell your precious metal with ease. And when it comes to security, you don’t have to worry about anyone breaking into your apartment to steal your precious metal. Your primary responsibility is to keep access to your e-wallet safe, and you must not disclose your login detail to any 3rd party to avoid illegal access to your online profile.
The biggest impediment against this system is the tax aspect. Tax authorities do not treat precious metals trading on this platform the same way with other ETFs. If you buy either gold or silver using ETFs, your income will be subjected to personal income tax (PIT) policies instead of capital gain tax (CGT). The implication here is that you will be paying more tax rate.
The good thing about gold and silver is their intrinsic value. They serve as a store of value (investment) and for beauty purposes. The most low-income class makes use of this system to acquire gold and silver.
It is a popular culture among women in countries like India and China. Culturally, these two countries support precious stones for cultural purposes such as burial rites, wedding ceremonies, etc.
This system does not yield much profit when you consider the return on investment (ROI), but then it is one of the traditional methods in buying gold and silver.
Gold Mining Stock
In some countries, the law doesn’t support precious mining metals individually without government permission. The best way to own gold under these circumstances is to invest in a company specializing in Precious metal. Gold and silver gotten through this channel cannot be confiscated by the authorities.
However, you must be careful when dealing with any company. You should run a background check to know their operational history before you purchase their stock.
- You must understudy the site where the company operates.
- The socio-political situation of the country
- The countries policies when it comes to trade in the area of mining
Do you know why bullion coins are popular? It is because buying gold and silver through this channel has a low commission, and the coin can be quickly sold due to its market demand. But then you must have an understanding of the market mode of Operandi first and foremost. The price difference between different dealers can be as high as 5%. So, it would be best to make a broad comparison of the price before settling down for any dealer.
The size and quantity you are buying are of significant concern when it comes to bullion coin. Large quantities can be store using a safe deposit box. But it indeed comes with an extra cost.
Junior mining stock
This method of buying gold and silver has all the drawbacks of senior mining stocks. They are primarily speculative. Some companies that parade themselves under this section may or may not have any gold or silver reserve. Because of these companies’ fraudulent nature, you shouldn’t trade with them at all.
Buying gold and silver is a wise investment choice. These two precious metals have proven their worth for many centuries as one of the most efficient ways to store value. With inflation tearing down the values of fiat currencies across, investing in gold and silver is an avenue to protect you from the ongoing financial crises.
However, it would good if you tread with caution because the path to investing in gold and silver requires that you compare and contrast each method, and you pick the one that is suitable to your interest.