Once you have decided to protect your wealth through investing in precious metals, you must decide how you want to invest in precious metals. There are many different ways to invest, ranging from exchange-traded funds (ETFs) to mining stocks and physical bullion. ETFs and mining stocks have become popular in recent years because they allow people to buy and sell gold with the convenience of a stock – but despite the convince, these are actually the two worst ways to invest in precious metals.
Mining stocks dramatically underperform physical metal over the long-term. This is because these stocks represent very risky companies that usually have a lot of debt. Mining companies are not only burdened with debt, but they are also often mismanaged and come with the risk of lawsuits, natural disasters or other unforeseen problems in the mine. For these reasons, mining stocks tend to do worse than gold its self, from an investment perspective.
The best way to invest in precious metals is through physical bullion.
The best way to invest in precious metals is through physical bullion. Bullion doesn’t have the downsides of ETFs and mining stocks, and it is the only way to truly own the gold you are investing in. That being said, investing in physical bullion is not completely straightforward. There are two ways to do it: with bullion coins or with bullion bars. The best choice depends on your budget and investment goals.
Precious Metals Bullion Bars:
Precious metal bullion bars are the largest and most efficient way to invest in precious metals. Bars are efficient because they tend to have the lowest premium over the spot price of gold or silver. These bars also do not have mark ups for design and rarity. They are also the easiest to store because they can be stacked and are harder to lose than bullion coins. For less expensive precious metals like silver, bullion bars are the best way to store large amounts of the metal.
Precious Metals Bullion Coins:
Bullion coins are the most convenient way to invest in precious metals, but they are less efficient than bullion bars. Coins can come with mark ups over the spot price of gold because of their designs or rarity. But you will usually be able to find coins that are not designed, and thus have smaller mark-ups. One of the major downsides of bullion coins is that they are easier to lose than bars, especially for cheaper metals like silver. For gold however, bullion coins are usually the best way to invest because you can purchase more affordable quantities of the metal with coins than with bars.
Which is Right for You?
The choice between bullion bars and coins depends on your budget and investment goals. Bullion bars are good for investors who want to store a large amount of metal – especially silver because it is cheaper than gold. On the other hand, bullion coins are ideal for investors who want to store a smaller amount of metal, especially more expensive metals like gold and platinum.
