Here we expand on earlier articles, with the themes of investing in gold, silver and platinum group metals. The goal is to integrate these articles into a single document.
The first mention of doing so is 1 Alternative ways of investing, where we discuss the possibilities outside of simple bullion; jewellery and coins, they both contain gold and silver, plus are regularly bought by dealers for purely their pure weight value. This is a good way to get started without being limited to any choice; a lot of places sell a wide variety of coins. If you decide to switch strategy, or consider it likely that you are going to do so at a later stage, there are many sellers who offer a big sack of coins with a kilo in pure weight, this allows for easy resell and a relatively low premium. If you think that you will keep the coins anyhow, starting with a specimen that you consider pretty and has a high purity level (minimum of 92,5% silver alias sterling or 91,67% gold which is 22 karats), will ensure a good start. Investing in coins is discussed to a greater extend in 13 Investment grade precious metal collectibles: Sentiment or smart?, the form of specially shaped, or printed, coins and figurines. Having these as a first purchase is either unadvised or the actual start of your portfolio: They are traded at a high premium so not really suited for investing, but do offer a very attractive item that can leave you wanting more. The same goes for jewellery, although you are more likely to take a haircut on that one, as both stones and labour are placed at a higher premium. . It is recommended to start with gold and silver, as platinum group usually has a higher premium and lower availability, plus it is accepted by less jewellers, in case you wish to sell.
In 3 Best way to account for your personal cash we talk about having cash, but we fail to discuss that gold and silver are both a form of cash; for thousands of years all coins were either gold or silver and today the association sticks still. There are several mints, virtually all governmental ones plus a few private manufacturers, who add a monetary value to a coin, put the metal content fairly close to that value and sell it to you for a price based on that monetary value (of course with a nice profit margin). Generally these are legal tender, mostly in name only due to the difference in value and profit. Similarly there are countries where gold and silver are still legal tenders or occasionally submit legislation to make it so. Exchanging gold or silver for some spending money can be done in every corner of the world.
4 How to save money for buying real estate discusses how you can use them as a store for value, with possibilities of value increasing, when saving for something big. The potential as a reserve is briefly mentioned in 6 Minimum cash reserve. The possible expansion of such an investment is the topic of 15 Larger or smaller bullion, cheap vs affordable; here we take a look at the sides of bigger and smaller investment pieces. Something to consider when investing for the mid to long term is how expensive the metals are in relation to each other, this is discussed in 19 Utilising the gold silver ration, it can help you to find the cheaper option or avoid buying on a peak. Selling at a more opportune time is possible, just not the main use for it.
The transition from fossil fuel to more sustainable energy is discussed in 9 The energy transition, this transition requires a huge amount of resources, beyond the metals we discuss as precious; copper is another benefactor, plus many others. Copper itself is not considered a precious metal, due to its lower value, but can be a nice addition to your portfolio. It is part of the noble metals group and, amongst others, highly demanded for its conductivity, it has been used by humans for many thousands of years. Copper is also a popular alloy metal for silver and gold (red coloured rose gold and sterling silver both use copper in nearly every instant).
Governments themselves also hoard gold, to protect from disruption largely, which we discuss in 25 Central banks. This is also a way to bolster alliances (via storing and buying from), once done also a way to signify trouble (relocating). Having gold stored in other countries seems like a bad idea for a nation, as it can be taken away by the other government, but simple fact is that some countries lack the space to store it themselves; geography can be a real problem when you need to store endless tons in a water and earthquake proof area. Lastly, the main reason countries have gold reserves is to protect against systemic risks, so having your gold in more than one single location is good thing, in case you are no longer able to reach that location. Also allies could use your gold as collateral/payment for assistance in times of need.
Please remember that buying only a single commodity as your full investment is not advised, as it can cause big shocks to your portfolio, a diversified approach is best.
