Porta Dos Fundos

Silver and Gold Investing – Frequently Asked Questions

New to gold investing? You probably have some of the same questions as other new precious metals investors. Here, I have taken the opportunity to answer some of the most frequently asked questions.

Investing in silver and gold can be the best way to protect yourself against inflation and uncertain economic times. In the past, most people have avoided investing in silver and sold because they did not understand the concept of a “hedge.” 

A hedge is a means of protecting yourself when the market moves against you. Gold and silver are a hedge investment because price of gold and silver tends to increase in value during times of inflation and recession. As a result, when your stocks are going down in value, gold prices are going up.

In the past, you had to purchase silver and gold one coin (or bar) at a time. Because the market was so illiquid, gold prices charged by dealers and coin shop owners varied widely from location to location. 

If you want physical gold, you can purchase silver and gold bars (or coins) over the internet and have them delivered safely and quickly to your door. If you are more comfortable owning securities, there are a number of stocks and mutual funds backed by the value of the silver and gold in their investment portfolios. 

Unlike selling gold jewelry, selling your silver and gold bars, bullion and equities is easier because gold and silver are traded more standardized forms. Because the market value for gold and silver backed equities is calculated daily, you can get a quote from any news outlet to find the current market price of your gold backed securities. If you want to sell, place a sell order with your broker in the same manner as you would sell nay other equity or security.

The “spot price” is defined as the price that is quoted for immediate (spot) settlement (payment and delivery). Spot settlement is normally one or two business days from trade date.

To sell gold and silver bullion, you need to know the “spot” price of the commodity.    The dealer will usually quote you silver or gold prices at a certain number of dollars (or a certain percentage) “under spot.” 

Circulated pre 1965 silver coins (often called “junk silver”) are 90% silver bullion and are sold at “times face” value. The dealer may quote you “10 times face” or “20 times face” per coin depending on the spot price of silver. You can research the internet in order to determine the going rate on junk silver. 

Gold and silver coins with numismatic value are valued differently. Do not use this method as a means to value rare coins that have numismatic (collectible) value. 

Only you and your investment advisor should answer that question after carefully evaluating your investment objectives as well as the risks and costs associated with investing. 

So, now that you understand silver and gold investing a little bit better, now is the time to get up and make an appointment to speak to your investment representative about whether or not to add some form of silver and gold to your investment portfolio.