Here are seven ways to invest and trade in precious metals:
- Own and store physical Gold and Silver coins or bars, aka bullion, yourself
- Remote storage
- Spendable Gold and Silver
- Gold and Silver ETFs aka paper Gold and Silver
- Gold and Silver mining ETFs
- Gold and Silver Futures
- Gold and Silver CFDs
|Holding your own|
Storing your coins and bars in your own vault is like owning your own private keys in Crypto terms. There are many similarities between owning your own Cryptos fully in your own wallet and holding Gold and Silver in your own vault.
Just the same, security is your own responsibility. In both cases, you are in full control of your money. You are not dependent on banks and other third parties. On the flip side, you are fully responsible yourself for keeping your money/assets save. So with Cryptos, you have to make sure that no one hacks your wallet and with Gold and Silver, you have to make sure no one breaks into your vault.
Here are some Bullion sellers that I know of:
- GoldSilverBull (Worldwide)
- GoldSilver.com (US)
- Bullionstar.com (Singapore)
- EuropeanMint.com (Europe)
- HollandGold.nl (The Netherlands)
- TheSilverMountain.nl (The Netherlands)
I personally used the ones in The Netherlands. There are many reliable local sellers of Bullion. Just do an online search for: “Buy Gold and Silver“.
Many Bullion sellers offer vaulting services. This means that the bullion will not be shipped to your house, but will be sent to a vault in a location of your choosing and that you will receive a written prove / confirmation of the storage in your name. This service also involves the possibility to sell back the bullion or to redeem it and have it shipped to you whenever you request it. So you own the Bullion, but you never see it and it is kept in high-security vaults, that also is ensured against theft. Of course, this service comes at a price in the form of a yearly fee which is based upon the amount of Gold and Silver stored.
Here are some service providers that specialize in remote storage:
Spendable Gold and Silver
|Gold backed debit cards|
If you want to have your Gold and Silver holdings to be easily and immediately spendable, you could consider having a Gold and Silver backed debit card from the following services:
Glint offers a MasterCard that is backed by an online account that can hold currencies and Gold in your name.
GoldMoney offers a similar service. Only here you will get a separate card per currency and a card directly linked to your Gold holdings held in your name.
Gold and Silver ETFs
One of the most cost-effective ways to buy into precious metals is by owning Gold and Silver ETFs. You will not be owning Gold or Silver in your own name, but you will be participating in price changes in the ETF that reflect the price changes in Gold and Silver. So in case the financial sector freezes or even collapses, you will most likely have a hard time claiming the huge gains the ETFs will have made. However, ETFs are a good hedge against the slowly watering down of all the currencies of the world. Also in uncertain times, investors tend to flee out of the stock market and into Gold. If you own a stocks and bonds portfolio, adding some Gold ETFs to the portfolio will likely reduce the volatility of that portfolio.
Some popular Gold / Silver ETFs:
Gold and Silver mining ETFs
|Gold and Silver Miners|
Another way to buy into precious metals is by owning shares in mining companies that mine Gold, Silver, Platinum and other metals. These shares are usually more volatile, meaning that if prices of Gold and Silver rise, the prices of these shares rise more. Conversely, if prices fall, prices of mining shares will drop even more. Also, many other factors influence the prices of these stocks, such as the companies management, possible new discoveries and if the company has forward hedged its portfolio. All things considered, you really have to be up to date with the business to invest in these shares. Still, if you do want to invest it is best to buy into mining ETFs to get a brought exposure to the industry.
Some popular mining ETFs:
- Vanguard Precious Metals and Mining Inv (VGPMX)
- VanEck Vectors Gold Miners (GDX)
- VanEck Vectors Junior Gold Miners (GDXJ)
Gold and Silver Futures
A futures contract is a contract holds the obligation to buy or sell an asset at a future date and price. Futures are traded on a futures exchange. At the expiry date, the contract is settled by physical delivery of the asset or by cash.
Futures are also leveraged products and are used for hedging and speculation. There are futures trading on many commodities and also on Gold and Silver. Gold and Silver miners as well as producers that need Gold or Silver use futures to hedge their exposure to price swings in the metals.
It is possible to trade these instruments through brokers such as Interactive Brokers, TD Ameritrade, etc.. Futures trading is more complex than investing in ETFs or physical Gold and Silver. Also, the leverage involved makes it possible to easily risk too much.
Futures are more for speculation/trading than for investing.
Gold and Silver CFDs
Another way to speculate on the prices of Gold and Silver is to trade CFDs on the Gold and Silver Futures.
A CFD is a Contract For Difference. As the name implies it is a contract between you and the issuing party, usually your broker or bank, in which you agree to pay or receive the difference in price of a referenced asset at the time of entry and the time of exit.
This instrument allows for hedging against and speculating on price movements in referenced assets. CFDs are not traded on an exchange. They are traded Over The Counter (OTC).
CFDs are mostly offered on referenced assets like commodities (futures), stocks, bonds, and indices. A CFD does not give you any rights to own, buy or sell the referenced asset.
ETFs and CFDs on Gold and Silver and Gold and Silver miner (shares) are available on my recommended broker platform:
Note that unleveraged long positions on ETFs are not CFD positions at Etoro, but that you will be owning the real ETF (same goes for stocks and cryptocurrencies).
Just sign up for a free demo account and search for Gold and Silver in the offered markets.