Spain conquered the New World looking for Inca cities made of gold. California’s population exploded during the gold rush of 1849 when men from around the world stampeded to Sutter’s Fort. A silver rush followed a decade later in the state of Nevada. Though fortune hunters today rarely pull out a mining pan, people are still looking to make money with precious metals.
Gold as an Investment
Gold has a place in any investment portfolio. Gold is seen as a tangible product and has often been favored by investors in times when other investments are doing poorly or as a hedge against inflation. Like any other investment, gold has had its ups and downs. Throughout the 1990s it was a dog of an investment, ending the decade at under $300 an ounce. A decade later prices soared more than 300 percent, up to more than $1,300 an ounce by the end of 2010. During the same time the housing bubble burst and stocks took a rollercoaster ride.
Silver as an Investment
Like gold, silver often shines when other investments are dull. Numismatists, otherwise known as coin collectors, value silver coins for their history and beauty as well as for the value of their weight. Though silver costs a fraction of the price of gold, it also saw a better than 300 percent price increase from 2000 to 2010. One bonus with silver is that it is also an industrial metal. Demand for silver could continue to rise even when the economy is does better.
How to Invest in Precious Metals
You might like to buy physical or silver as Gold bars, silver ingots, coins or jewelry. Storing high value items might make you nervous. Luckily there are easier ways to invest in precious metals. Some mutual funds and exchange-traded funds (ETFs) invest in gold, silver or a combination of metals. You can even invest in precious metals through the stock market, by purchasing shares in mining companies. Some of those companies have diversified operations, mining not just gold or silver but other resources as well. Owning stock in mining companies lets you hop on the road to gold and silver riches while taking some risk away through diversification. There are also reputable metals dealers who buy and store gold and silver for you.
Whether to Buy Silver or Gold
Gold is more valuable than silver ounce-per-ounce, so if you plan to buy physical metals you might find it easier to store. When gold becomes very expensive, it opens the door for silver investors as an alternative, often causing silver prices to soar in response. You can invest in both and keep an eye on the markets to see which you should hold more of at that particular time. Keep in mind that silver’s industrial uses might make it a better investment during economic boom times. Silver and gold are both speculative plays and should be approached with caution.
Annabella Gualdoni has written newsletters and reports for corporations and nonprofits since 1994. She is a real estate professional and also teaches subjects including international cooking and travel, dating/relationships and personal finance. Gualdoni has a Bachelor of Arts in international development from University of California, Berkeley, a Master of Arts in international relations from Boston University, and a Juris Doctor from Boston College Law School.