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Tips for First-time Precious Metal Investors

If you’re new to investing, or you’re thinking of branching out into new sorts of commodities, then you’ve probably thought about precious metals. You may have thought about it and then dismissed the idea because it feels a bit old-fashioned, or you simply don’t know enough about it to take the plunge.

You should think again, though, because investing in precious metals isn’t so much old-fashioned as tried-and-tested and perennially reliable! Here’s what you need to know before you get started.

metal investor

You need to decide between bars and coins

Neither is better, it just depends on what you plan to do with your investment in the mid to long term. If you’re planning to hold onto your metals for just a few years before selling them, then coins will be better for you. If you buy, for example, 20 gold bullion coins from Golden Eagle Coins, it’s easy to sell half of them if you decide to. Bars aren’t as flexible, because if you have the larger ones, you can’t sell half a bar. You can, however, buy several different sizes of bar for more selling options.

You need to know your coins first

While bars tend to have roughly the same unit value, coins can vary widely in price and value. Some bullion coins are worth the trade price, or spot price, of gold and others are worth more because of their provenance and history. These coins are known as numismatic coins and some can fetch enormous prices. However, if you’re new to precious metals, you’re best off leaving numismatic coins for now and focusing on bullion.

Work out your budget

Your budget is the biggest factor when it comes to working out what you buy and how much. Your precious metals dealer wants to make a profit, because they’re running a business, of course! This means that they buy in their coins and bars at just below the market price and sell it for just above the going rate. This price difference is called the spread and it varies by dealer and with the prevailing market conditions.

Whatever you pay for your metals, you need to hang onto them for a while because you’ll be selling them back to a dealer for below the market price. This means you have to wait for the price to rise enough to make it all worth it. If you sell your gold bullion at 4% below the spot price and it’s only risen by 6% since you bought it, then it’s hardly worth the effort. If it’s risen by 30%, however, then it certainly is!

What to do with the metals when you’ve bought them

One of the biggest advantages of owning physical gold is that, well, it’s physical! If the banks crash, or there’s a huge economic downturn, your metals are a tangible form of insurance that can come in handy if regular currency loses value or is unavailable.

What you can’t do though, is leave your metals, especially gold, on display! Many investors spread their metals out between a secure safe on their own premises and a bank vault so that there’s always some instantly available. If you decide to install a safe at home, then you need to speak to your insurance provider because your premiums will probably go up.

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1 Comment

  • Brian Hastings

    Great post! This was quite helpful and informative. Thanks for sharing the knowledge.

    November 29, 2018 at 8:18 am Reply
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