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Why Buy Gold and Silver Now?

It is easy to see why gold and silver have been in a long-term bull market for over a decade when you look at the reasons why people invest in precious metals. It is simple to draw parrallels from today to all of those aforementioned reasons. Ask yourself this question, do you see these problems leaving the world and our governments anytime soon? Do you think that the Federal Reserve is going to stop printing money anytime soon? As long as these problems exist, gold and silver will prosper in the long-term. Sure there will be short-term volatility as there is in any investment, but its long-term that we are concerned about with precious metals.

Many people are asking today, aren't we in a bubble? This question is due to the steady rise of gold from $252 per ounce in 1999 to where it sits today. So let’s address this important question, and lend some understanding to how bull markets typically work.

Aren't We in a Precious Metals Bubble? Bull markets typically occur in three phases: the accumulation phase, the awareness phase, and the speculative or panic phase, which is followed by a peak, and then a return to fundamental values. Look at the chart below, which shows gold against other recent bull markets that have gone through all of the phases.

 

The chart above is a few years old, but gold was around $1,400 per ounce in 2010. We are currently bouncing around below that number. But what is important here is that gold has not had an explosive third phase like other assets that have burst in the past. A bubble requires massive public participation in the market, like what we saw with real estate in 2005; everyone wanted in and many people were buying houses sight unseen at over market value, which shot prices up dramatically in a short period of time. It is estimated that less than 3% of the general public owns precious metals of any kind, thus it is probably safe to say that we have not seen the end of this bull market. In comparison to the gold bull market of the 1970s, when gold rose 2,400%, in the current bull market we have only seen gold prices rise about 400%, which leaves some room to grow*.

If we are in a bull market for precious metals, prices are extremely low as compared to where they were in 2011. Silver breached $49 per ounce in April and gold breached $1,900 per ounce in November of that year. Even if gold and silver just retrace where they have been, which many experts are expecting much higher levels than $49 and $1,900, we would see some very nice gains. With governments around the world printing money with no end in sight, which is only good for precious metals, we believe that now is a great time to buy.

How Do I Buy Gold and Silver

The first step is to establish your goals and objectives, which you can do by consulting your financial advisor or doing a lot of your own research. Because different types of precious metals can do something different for your portfolio it is important to know where to want to head and what you are comfortable with first.

For example gold tends to be more stable, while silver tends to be more volatile making much bigger swings both up and down. Therefore many investors don’t have the stomach for silver. But many analysts believe that silver has the higher potential for growth due to its historical 16 ounces of silver to every 1 ounce of gold (currently around 60 to 1). Thus having an understanding of why you are investing and what your risk tolerances are will help you to determine which types of metals to buy and what percentages of each you want to own.

Physical Metals vs. ETF’s vs. Mining Shares

Once you have established your goals and investment objectives you need to determine the types of precious metals you would like to own. These options include owning shares in gold and silver mining companies, owning shares in ETF’s like GLD or SLV, owning physical coins and bars or all of the above.GLD and SLV When you own ETF's (electronically traded funds) you own a share of the gold or silver price, you do not own the physical metal itself. Each share is “backed” by physical metal but in order to receive physical metal you have to qualify, which usually means redeeming large quantities, sometimes 100,000 oz. at a time. ETF's are great for short-term investing in price fluctuations, usually loved by day traders.

Mining Shares Owning shares in gold and silver mining companies is another popular way of participating in the precious metals market. You own a share of stock in a company, not in physical gold. Some investors like this because you can gain leverage to the price of metals, as the price rises shares in miners can increase faster. Remember that when you own stock you are subject to not only market risk due to price fluctuations, but also company problems like management issues and possible bankruptcies.

Physical Gold and Silver Owning physical gold and silver is pretty straight forward. You buy it, store it and sell it when you are ready. There are two types of physical metal you can own, bullion and rare coins. Bullion is modern issue coins and bars whose prices rise and fall in step with the spot prices as published around the world (to see current prices visit our home page). Rare gold and silver are coins minted a long time ago and have quality and rarity factors that play into their value which can add extra leverage to the precious metals markets.

Before you buy any of these types, determine what allocation of your overall portfolio you would like to put into precious metals. Many advisers recommend putting 5-20% into gold and silver out of your overall investment portfolio as a general guideline to being well-diversified. Consult your financial adviser for more information on what is right for you.

What Type of Gold and/or Silver Should I Buy?

As discussed before there are two different types of physical gold and silver, bullion and rare coins. What is appropriate for you will be determined by your goals and objectives, not buy a sales person’s whims or commissions. Let’s give further clarification about the two different types and what they are used for in a diversified portfolio, this way you can make a decision for yourself.

Bullion Coins and Bars

 

Bullion gold and silver tracks the spot price of gold and carries a low premium above that spot price depending on the product. Bullion is the most popular way to invest in gold and silver and there is a lot more of it to go around (compared to rare coins). 

BUY SILVER :: BUY GOLD

 

Bullion comes in coins or bars and the larger the product the lower the cost will be over spot. For example, a 10 oz. silver bar will cost less to produce than a 1 oz. American Silver Eagle and will therefore cost you less per ounce. But on the sell side you will also get more for the eagle per ounce than you will for the 10 oz. bar.

Bullion products are highly liquid and can perform in well the short-term. Gold bullion has averaged around 16% per year since January of 2001.* Below are some examples of bullion that we offer on our site: Numismatic is a fancy term for collectible, but don’t let that fool you. Many investors are buying the rare coins today for the premium play. Because there are a limited supply of pre-1933 gold and silver coins, supply and demand play a big role in their value. As demand heats up, supply becomes constrained and prices rise. Many times in the past we have seen gold prices rise, creating demand in the pre-1933 coins and as a result they outperform bullion products.


Our Top 5 Bullion Products by Sales

  1. American Silver Eagles
  2. 10 oz Silver Bars
  3. American Gold Eagle
  4. 1 oz Silver Rounds
  5. 1 oz gold bars

 

Rare Coins

 

Bullion gold and silver tracks the spot price of gold and carries a low premium above that spot price depending on the product. Bullion is the most popular way to invest in gold and silver and there is a lot more of it to go around (compared to rare coins). 

Buy Pre-1933 Gold Coins 

 

products (pre-1933 coins) tend to perform better in the long-term than bullion products. Since January of 2001, common date $20 Liberty gold coins in mint state 63 condition have averaged around 20% per year.* Below are some examples of pre-1933 coins that we have on our site: As we said before, determining the right mix of gold and silver bullion and rare coin products is essential to your success in investing in them. If you still have questions please speak with one of our precious metals expert by calling us at 877-863-GOLD. We always recommend a blend of precious metals to keep you diversified.

Buying From Us Buying precious metals from us is easy. All you need to do is register for an account, place the items in your cart and proceed with the checkout process. Once funds have been secured we will ship the metals insured right to your door.

Now of course there are other ways to buy. Every major city has a precious metals dealer nearby where you can walk in and buy gold and silver. You will want to do your research either way to make sure that you are working with someone you can trust.

*Please note that past performance is no guarantee of future results, thus we recommend a mix of precious metals products just as you would diversify stocks in your portfolio.