Various Ways to Invest in Precious Metals
Whether it is gold, silver, platinum, some of the more common ones, or you can buy copper, lead, and palladium. Precious metals can be bought in numerous ways and I will cover just a few.
Stocks
Yes, precious metal stocks are available, but I do need to warn you, there are people out there who will scam you. Precious metal stocks, most of which, are issued by mining companies. One way to invest is by picking some companies, take your time doing research into the companies before investing even a dime. One of the least expensive ways is to use an online brokerage firm. They often offer lower commission fees and a way to follow a companies financial progress with plenty of research material, including regular filings with the Securities and Exchange Commission.
Exchange Traded Funds [ETFs]
ETFs consist of a group of securities, commodities and derivatives. These are traded the same as stocks, they just represent a sector of the market in broader terms. Shares in an ETF fund are traded by investors the same way any shares would be. The price of these shares is determined by a constantly changing bid which does not always accurately reflect the underlying value of the precious metals. Before investing you should be aware of the fees involved, which can end up being higher in some cases than mutual funds, so it is best to understand all underlying costs before investing.
Mutual Funds
As you may already know, Mutual Funds are a collection of stocks held under a collective fund which is in itself represented as shares, like stocks, which reflect the price of all the stocks held. Each shareholder accepts the gains or losses in a fund. With precious metals, a fund can hold a variety of investments from mining companies, stocks in banks which hold precious metals, bonds, futures, options, among other commodities. Some funds will exclusively invest in precious metals while other funds will make it only part of their overall portfolio.
IRAs
With the Taxpayer Relief Act, signed in 1997, allows physical precious metals, gold, silver or platinum, to be included in an IRA. You will first need to check with whoever manages your IRA to see if they allow precious metals to be added. If so, its a matter of signing some papers, and paying storage or custodial fees. From then on it is just a matter of letting the custodian know when to buy or sell the precious metal. If your current IRA does not allow the addition then it may just be a matter of opening a new account
Why Invest in Precious Metals?
Many people believe they can be a hedge against inflation, but that is not a guarantee. If precious metals are part of an overall investment plan, then yes, they can add value and help minimize the ups and downs of the stock market as well as the overall economy. I would recommend adding precious metals in the form of a mutual fund, unless you are willing to do the research to invest in stocks directly
